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Author: 


Lincoln,  Edmond  Earle 


Title: 


The  results  of  municipal 
electric  lighting  in... 

Place: 

Boston 

Date: 

1918 


COLUMBIA  UNIVERSITY  LIBRARIES 
PRESERVATION 

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ORIGINAL  MATERIAL  AS  FILMED  -     EXISTING  BIBLIOGRAPHIC  RECORD 


BUSINESS 

550 
L63 


Lincoln,  Edmond  Earle,  1888- 

The  results  of  municipal  electric  lighting  in  Massachusetts, 
by  Edmond  Earle  Lincoln  ...  Boston  and  New  York,  Hough- 
ton Mifflin  company,  1918. 


XX,  484  p.,  1  1.    map,  diagrs. 
Marx  prize  essays,    xxvn) 

Bibliography:  p.  [371]-387. 


21'="'.     {Half-title:  Hart,  Schaflfner  & 


l^lectric  lighting— Massachusetts.    2.  Municipal  ownership— Massa- 
dMf^tts.       I.  Title. 

18—20788 


Library  of  Congress  _ 

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LIBRARY 


School  of  Business 


/X 


School  of  Business  Librarf 
Columbia  Uuiversity 

JUN  2  7    1941 


* 


A  complete  list  of  the  books  published  in  the  Hart, 
Schaffner  &  Marx  Series  of  Prize  Essays  will  be  found 
at  the  end  of  this  volume. 


HiAtt,  ^(^ffnet  &  QUavx  C|)n36  (Sbba'^s 


xxvn 


THE  RESULTS  OF 

MUNICIPAL  ELECTRIC  LIGHTING 

IN  MASSACHUSETTS 


^ 


THE  RESULTS  OF  MUNICIPAL 

ELECTRIC  LIGHTING  IN 

MASSACHUSETTS 


BT 


EDMOND  EARLE  LINCOLN,  M.A.  (Oxon.),  Ph.D. 

Instructor  in  Economics,  and  Tidor  in  the  Division  of  History, 
Government,  and  Economics,  Harvard  University 


BOSTON  AND  NEW  YORK 
HOUGHTON  MIFFLIN  COMPANY 


s< 


it4y 


COPYRIGHT.   ,9,8,   BY  HART,  SCHAFFNER   *   MARX 
AIO.  RIGHTS  RKSXRVED 

Published  September  ig/S 


^iiisiii4 


•in 


TO 

THOSE  WHO  ARE 

SINCERELY  SEEKING  THE  TRUTH 

ON  QUESTIONS  OF  PUBLIC  POLICY 

THIS  BOOK  IS  DEDICATED 

BY 

THE  AUTHOR 


*  t 


From  Lib.    of 
Jolxa  Bates  Olark 
Oct.  15, 1940 


PREFACE 


-m 


This  series  of  books  owes  its  existence  to  the  generosity 
of  Messrs.  Hart,  Schaffner  &  Marx,  of  Chicago,  who  have 
shown  a  special  interest  in  trying  to  draw  the  attention  of 
American  youth  to  the  study  of  economic  and  commercial 
subjects.  For  this  purpose  they  have  delegated  to  the  un- 
dersigned committee  the  task  of  selecting  or  approving  of 
topics,  making  announcements,  and  awarding  prizes  an- 
nually for  those  who  wish  to  compete. 

For  the  year  ending  June  1,  1917,  there  were  offered:  — 

In  Class  A,  which  included  any  American  without  restric- 
tion, a  first  prize  of  $1000,  and  a  second  prize  of  $500. 

In  Class  B,  which  included  any  who  were  at  the  time 
undergraduates  of  an  American  college,  a  first  prize  of  $300, 
and  a  second  prize  of  $200. 

Any  essay  submitted  in  Class  B,  if  deemed  of  sufficient 
merit,  could  receive  a  prize  in  Class  A. 

The  present  volume,  submitted  in  Class  A,  was  awarded 
first  prize  in  that  class. 

J.  Laurence  Laughun,  Chairman 

University  oj  Chicago 
J.  B.  Glabk 

Columbia  Unixersiiy 
Henby  C.  Adams 

University  of  Michigan 
Edwin  F.  Gay 

Harvard  University 
Theodore  E.  Burton 

New  York  City 


4 


PREFATORY  NOTE 

The  author  takes  this  opportunity  to  acknowledge 
specifically  his  obligations  to  a  number  of  friends  who  have 
critically  read  the  manuscript  of  this  book,  either  wholly 
or  in  part.  Professor  Harry  E.  Clifford,  of  the  Electrical 
Engineering  Department  of  Harvard  University  and  of 
the  Massachusetts  Institute  of  Technology,  has  given 
special  attention  to  the  technical  portions.  Mr.  Henry  B. 
Sawyer,  of  the  Stone  &  Webster  Organization,  has  looked 
particulariy  over  the  financial  parts  of  the  book,  and  has 
generously  extended  the  facilities  of  the  firm  to  the  writer. 
Mr.  Alonzo  R.  Weed,  Chairman  of  the  Massachusetts 
Board  of  Gas  and  Electric  Light  Commissioners,  has  read 
the  manuscript  throughout,  with  special  reference  to  ques- 
tions of  law  and  regulation;  and  General  Morris  Schaff, 
also  of  the  Commission,  has  taken  great  interest  in  the 
work. 

From  all  of  these,  helpful  suggestions  and  many  coiu*- 
tesies  have  been  received,  but  especially  from  Professor 
Charles  J.  Bullock,  Chairman  of  the  Department  of  Eco- 
nomics at  Harvard,  who  has  given  careful,  constructive 
criticism  at  various  stages.  Mention  should  also  be  made 
of  the  kind  assistance,  both  direct  and  indirect,  rendered 
by  Dean  Edwin  F.  Gay,  of  the  Harvard  Graduate  School 
of  Business  Administration,  while  the  writer  was  carrying 
on  the  local  survey  of  the  Hghting  plants  herein  studied. 
To  the  hosts  of  others  who  have  at  one  time  and  another 
been  consulted,  a  general  reference  is  made  in  the  Intro- 
duction. For  matters  of  opinion  and  methods  of  presen- 
tation, however,  the  author  must  assume  full  responsi- 
bility. 


PREFATORY  NOTE 


Finally,  grateful  acknowledgment  is  due  the  publishers 
for  the  consideration  which  they  have  shown  and  the  ex- 
pedition with  which  they  have  prepared  for  the  public  a 
book  which  presents  an  unusual  number  of  typographical 
difficulties. 

The  Author 

WASHmOTON,  D.C. 

August,  1918 


CONTENTS 

Introduction 

Point  of  view  —  Reasons  for  study  of  subject  —  Materials 
used  —  Scope  and  methods  of  investigation  —  Suggestions  to 
readers. 

CHAPTER  I 

A  Survey  and  Criticism  op  the  Literature  on  the  Sub- 
ject OF  Municipal  Electric  Lighting  in  the 
United  States 

Development  of  the  industry  —  Comparisons  —  Early  in- 
terest in  the  subject  — Foster  —  Francisco — Parsons  —  Massa- 
chusetts Board  of  Gas  and  Electric  Light  Commissioners  — 
Commons — ^Bemis  —  Fourteenth  Annual  Report  of  U.S. 
Commissioner  of  Labor  (1900)  —  State  Bureaus  of  Labor 
Statistics  —  Adams  —  U.S.  Census  of  Central  Electric  Light 
and  Power  Stations  —  National  Civic  Federation  Report  — 
Periodicals  —  Miscellaneous  —  Present  sources  of  information 
—  Foreign  experience. 


CHAPTER  n 

The  Massachusetts  Laws  and  the  Work  op  the 
Massachusetts  Board  op  Gas  and  Electric  Light 
Commissioners 

Reasons  for  selection  of  Massachusetts  —  Board  of  Gas 
Commissioners  (1885)  —  Authority  extended  to  private  electric 
lighting  plants  (1887)  —  Danvers  Case  (1889)  —  Municipal 
Ownership  Act  (1891)  —  Modified  in  1893  —  Present  law  — 
Method  of  acquiring  a  plant  —  Basis  of  valuation  —  Munici- 
pal light  boards  and  managers  of  municipal  lighting  —  Annual 
expenses  defined  —  Cost  —  Depreciation  —  Fixing  of  prices 
(public  and  private)  —  Rates  —  Compulsory  supply  —  Uni- 
form accounts  —  Control  of  capitalization  of  companies  —  Ex- 
tent of  Authority  of  Board  —  Regulation  of  public  plants  — 
Regulation  of  companies  —  Competition  —  Principles  of  val- 
uation —  General  policy. 


36 


zu 


CONTENTS 


CONTENTS 


xui 


CHAPTER  m 

Municipal  and  Private  Electric  Lighting  in  Massa- 
chusetts: Methods  of  Comparison  to  be  followed 

Development  of  the  industry  —  General  comparisons  for  all 
plants  — •  Numerical  —  Financial  —  Purchase  of  current  — 
Distribution  by  population  groups  —  Investment  —  Change 
from  private  to  public  ownership  —  Action  taken  by  cities  and 
towns  regarding  municipal  ownership  —  Date  of  installation 
of  plants  —  Difficulties  of  comparison  —  Testing  the  evidence 
—  Physical  data  —  Intangible  items  — Groups  of  plants  se- 
lected as  of  1915  —  Generating  plants  (eighteen  public  and 
seventeen  private)  —  Purchasing  plants  (twenty-one  public  and 
sixteen  private)  —  General  comparisons  —  Five-year  period  — 
Policy  to  be  followed. 


CHAPTER  IV 

Physical  Statistics,  Analyses,  and  Comparisons  . 

1.  Station  equipment:  —  Boilers  —  Prime  movers  —  Gener- 
ators. 

2.  Fuel  consumption. 

S.  Output  and  disposal  of  current:  — Load  factor  —  Maxi- 
mum demand  factor  —  Current  unaccounted  for  —  Trans- 
formers—  Increase  in  output  —  Disposal  of  current  — 
Consumption  of  current  —  Per  capita  analysis  —  Other 
analyses. 

4.  Customers  and  per  customer  analyses. 

5.  Connected  load  and  per  connected  load  analyses:  —  Light 
load  —  Power  load  —  Use  of  load,  etc. 

6.  Street  lighting  data  and  analyses:  —  Character  of  lamps  — 
Length  of  lines  —  Candle  power  —  Hours'  use  per  night. 

7.  Lines,  poles,  and  transformers:  —  More  rapid  growth  of 
private  lines  —  Overhead  —  Relation  to  customers  and 
population  —  Poles  —  Policy  adopted  by  public  plants  — 
Size  of  transformers. 

8.  Physical  statistics  of  purchasing  plants:  — Output  — 
Sales  —  Character  of  business  —  Customers  —  Connected 
load  —  length  of  lines  —  Poles  —  Conclusions. 

9.  Extent  of  territory,  roads,  and  population:  —  Difficulty  of 
separating  rural  from  urban  —  Corrections  made  —  Pro- 
portion of  dwellings  served. 

Summary  —  Tentative  conclusion. 


55 


88 


CHAPTER  V 

Financial    Statistics    of    Generating    Plants:    The 

Capital  Account 153 

Difficulty  of  comparison  —  Different  accounts  kept  by  pub- 
lic plants  —  Comparison  of  investment  —  Reasons  for  differ- 
ences —  Analyses  of  investment  —  Station  —  Distribution  — 
Policy  of  Extension  —  Additions  during  year  —  Balance  sheets 
—  Municipal  deficits  —  Methods  of  financing. 

SumTnary, 

CHAPTER  VI 

Financial  Statistics  of  Generating  Plants  (continued) : 

Operating  Expenses  and  Operating  Income    .      .180 

1.  Unit  costs:  —  Total  —  Manufacturing  —  Fuel  —  Wages 

—  Distribution  —  Other  analyses. 

2.  Rates    and    income:  —  Total  —  General   comparisons  — 
Light  —  Power  —  Rate  schedules  —  Percentage  analysis 

—  Other  analyses. 

Summary. 

CHAPTER  Vn 

FiNANCLAii  Statistics  of  Generating  Plants  (concluded)  212 

1.  Disposal  of  net  income:  —  General  analysis  —  Depreciation 

—  Explanation  of  apparent  differences  —  Comparison  ov« 
period  of  years. 

2.  Other  comparisons  of  financial  results. 

3.  The  cost  of  street  lighting  —  Charges  to  be  considered  -* 
Various  comparisons. 

Summary  —  Tentative  conduaion. 


CHAPTER  Vm 

Financial  Statistics  of  the  Purchasing  Plants 

1.  The  capital  account. 

2.  Operating  expenses  and  operating  income. 
8.  Disposal  of  net  income. 

4.  The  cost  of  street  lighting. 

Summary. 


.  U% 


nv 


CONTENTS 


CHAPTER  IX 

Miscellaneous  Considerations 257 

1.  Labor  and  wages:  —  Efficiency  of  labor  tested—  Wages 
analysis  —  Labor  legislation. 

2.  Valuation  of  Estates  and  Tax  Rates:  — 

a.  In  municipalities  served  by  generating  plants  —  Rate 
of  increase  in  valuations  of  real  estate  between  certain 
periods  —  Increase  of  tax  rates  in  municipalities  own- 
ing plants  —  Financial  condition  of  municipalities  in 
which  plants  are  located. 

b.  In  municipalities  served  by  purchasing  plants  —  As 
above. 

8.  The  intangible  items:  —  Benefits  and  possibilities  of  mu- 
nicipal ownership  —  What  are  the  actual  conditions?  — 
Difficulties  involved. 


Summary. 


The  Local  Survey 


CHAPTER  X 


The  preliminaries  —  Schedules  —  Method  of  conducting  — 
Data  obtained  —  Correspondence. 


286 


CHAPTER  XI 
The  Local  Background:  Generating  Plants 

1.  The  central  station:  —  Equipment  —  "Housekeeping"  — 
Capacity  —  Adequacy  —  Why  cease  to  generate  current? 
—  Condition  of  public  plants. 

2.  Distribution:  —  Local   conditions  —  Extension   policy  — 
Condition  of  lines,  etc. 

8.  Consun4>tion:  —  Complaints  — Jobbing — Rates  and  serv- 
ices, etc. 

4.  Financial  matters:  —  Free  service  rendered  or  received  by 
municipal  plants  —  Investment  in  dead  assets  —  Other 
considerations. 


299 


Summary. 


CHAPTER  Xn 


The  Local  Background:  Generating  Plants  {concluded)  325 

5.  The  management:  —  Methods  of  selecting  municipal  light- 
ing managers  —  Qualifications  —  Authority  —  Municipal 
light  boards  —  Graft  —  A  word  for  the  present  managers. 


CONTENTS 

6.  The  employees :  —  Selection  —  Conditions  of  employment — 
Wages  —  Hours  —  Vacations,  etc. 

7.  General  considerations: —  Reasons  for  acquiring  public 
plants  —  Attitude  of  various  parties  —  Getting  new  busi- 
ness —  Result  of  policies  adopted  by  municipalities  — 
Changes  suggested. 

Summary  —  Brief  Condusion. 


XV 


CHAPTER  XIII 

* 

The  Local  Background:  Purchasing  Plants 

1.  Distribution. 

2.  Consumption. 

3.  Financial  considerations. 

4.  The  management. 

5.  The  employees. 

6.  General  considerations. 


.  348 


Summary. 


CHAPTER  XIV 


Conclusion 358 

Conclusions  regarding  municipal  generating  plants  —  Phys- 
ical —  Financial  —  Opposite  findings  in  the  case  of  the  dis- 
tributing plants  —  Under  what  conditions  public  owner- 
ship appears  to  be  justified  in  Massachusetts  —  A  word 
about  the  companies  —  Need  of  revision  of  the  present  ac- 
counting system  —  Municipal  plants  should,  if  possible,  be 
conducted  as  commercial  enterprises  —  Results  to  be 
hoped  for  —  Relation  to  the  general  question  of  public 
ownership. 

BIBLIOGRAPHY 

Note  —  Classified  List  of  References 
1.  Books  and  Manuals 


373 


2.  Public  Documents  and  Bulletins  (National,  State, 
AND  Municipal),  Laws,  and  Officlal  Reports  .      .  377 

3.  Articles  in  Periodicals:  Transactions  and  Pro- 
ceedings OF  Technical  Societies 881 

4.  Monographs,  Bulletins,  Miscellaneous  Reports, 
Addresses,  etc 385 


ZVl 


CONTENTS 


STATTSTTCAL  APPENDIX 
Note 391 

A.  Statistics  op  Generatinq  Plants       .....  393 

B.  Statistics  of  Purchasing  Plants 459 

Index 479 


MAPS,  TABLES,  CHARTS 

Map:  Showing  geographical  distribution  of  72  electric  light 

plants  in  Massachusetts  (1914-1915)    ....    76 

TABLES 

1.  Comparative  data  regarding  private  and  municipal 

central  electric  stations  in  the  United  States  .       .     12 

2.  Changes  in  ownership 13 

3.  Relation  of  the  electrical  industry  in  Massachusetts  to 

that  in  other  States 56 

4.  Number  of  central  electric  stations  of  all  kinds  in 

Massachusetts  (1886-1915) 57 

5.  Assets  of  private  and  municipal  electric  light  plants 

in  Massachusetts  (1891-1915) 58 

6.  Operating  expenses  and  operating  income  per  K.W.H. 

output  in  public  and  private  plants  (1902-1915)       .     61 

7.  Number  of  K.W.H.  generated  and  purchased  (1907 

and  1915) 64 

8.  Number  of  plants  serving  a  given  population  (1916)    .     65 

9.  Private  plants  changing  to  municipal  ownership.      .    70 

10.  Action  taken  by  Massachusetts  cities  and  towns  re- 

garding municipal  ownership  of  electric  lighting 
(1895-1915) 72 

11.  Municipal  plants  beginning  operation  at  certain  dates    73 

12.  General  information  regarding  company  generating 

plants 78 

13.  General  information  regarding  municipal  generating 

plants 70 

14.  General  information  regarding  public  and  private  pur- 

chasing plants 80 

15.  Comparative  averages  of  the  two  groups  of  plants  .  81 

16.  Character  of  prime  movers 91 

17.  Relations  existing  between  the  station  units         .       .  93 

18.  Transformer  data  (generating  plants,  1915)    .       .       .  103 


xviii  MAPS,  TABLES,  CHARTS 

19.  Relative  amounts  of  current  delivered    .      .      .      .105 

20.  Relation  between  actual  and  possible  light  customers 

(1915) 110 

21.  Utilization  of  maximum  demand 124 

22.  Street  lighting  data  (generating  plants,  1915)       .       .  128 

23.  Transformer  data  (purchasing  plants,  1915)  .       .       .135 

24.  Connected  load  data  (purchasing  plants,  1915)      .       .  138 

25.  Generating  plants  —  Relations  between  investment, 

equipment,  and  extent  of  business  (Holyoke  ex- 
cluded)       160 

26.  Operating  expenses  per  K.W.H.  delivered  (1914-1915)  183 

27.  Percentage  analysis  of  expenses  (generating  plants)  .  195 

28.  Income  per  K.W.H.  sold  (Holyoke  excluded)       .       .  198 

29.  Maximum  net  rates  per  K.W.H.  (generating  plants)  202 

30.  Percentage  analysis  of  the  various  classes  of  income  .  207 

31.  Percentage  analysis  of  chaises  against  income      .      .  213 

32.  Relation  between  investment,  depreciation,  and  re- 

pau-s,  1910-1915 220 

33.  Generating  plants:  Comparison  of  financial  results  of 

operation 226 

34.  Ditto 226 

35.  Ditto 227 

36.  Ditto 228 

37.  Cost  of  street  lighting  to  municipalities  owning  their 

generating  plants 231 

38.  Ditto 232 

39.  Ditto 232 

40.  Ditto [233 

41.  Ditto 233 

42.  Comparative  investment  data  (purchasing  plants)    .  243 

43.  Comparative  expenses  per  K.W.H.  sold  (purchasing 

plants) 247 

44.  Percentage  analysis  of  expenses  (purchasing  plants)  .  248 

45.  Maximum  net  rates  per  K.W.H.  (purchasing  plants, 

1910  and  1915)  249 

46.  Comparative  income  (purchasing  plants)        .       .       .  250 

47.  Cost  of  street  lighting  to  the  towns  owning  their  dis- 

tributing system 252 


MAPS,  TABLES,  CHARTS 


nx 


48.  Comparative  efl5ciency  of  labor 

49.  Relative  wages         

50.  Comparative  wages  for  all  plants  in  Massachusetts  .* 

51.  Adoption  of  labor  legislation  (close  of  1916)  . 

52.  Valuation  of  real  estate  and  tax  rates  in  municipalities 

in  which  generating  plants  are  located      .       . 

53.  Financial  condition  of  municipalities  in  which  generat- 

ing plants  are  located,  1915 

54.  Valuation  of  real  estate  and  tax  rates  (purchasing 

.P^^ts) 

55.  Fmancial  condition  of  municipalities  in  which  pur- 

chasing plants  are  located,  1915 

56.  Petitions  of  municipal  government,  citizens,  or  con- 

sumers regardmg  price  or  quality  of  service  since 
1910,  and  action  of  State  Board  thereon 

57.  Voluntary  reductions  in  maximum  net  commercial 

lighting  rates  since  1910  (cents  per  K.W.H.) 

58.  Voluntary  reductions  in  maximum  net  commercial 

lighting  rates  since  1910  (cents  per  K.W.H.) 

59.  Action  taken  regarding  municipal  ownership  by  33 

cities  and  towns  having  private  plants  (until  1917)  344 


260 
262 
263 
265 

269 

276 

275 
279 


312 


313 


314 


I. 

n. 
in. 

IV. 

V. 

VI. 

vn. 
vm. 

IX. 
X. 

XI. 

xn. 


CHARTS 

Number  of  watt  hours  generated  per  pound  of  coal  96 
Total  investment  per  K.W.  capacity  of  dynamos  .  .  166 
Station  investment  per  K.W.  capacity  of  dynamos  .  168 
Distribution  investment  per  K.  W.  capacity  of  dynamos  170 
Manufacturing  cost  per  K.W.H.  generated  ...  184 
Cost  of  fuel  per  K.W.H.  generated  .  .  .  ! 
Number  of  pounds  of  coal  used  per  K.W.H.  gen- 
erated       

Cost  of  station  labor  per  K.W.H.  generated  . 
Distribution  cost  per  K.W.H.  delivered 
Total  operating  costs  per  K.W.H.  delivered  .       [ 
Relation  between  maximum  net  and  average  commer- 
cial lighting  rates  (private  generating  plants)  .       .  202 
Ditto  (municipal  generating  plants)        ....  202 


186 

186 
188 
190 
194 


MAPS,  TABLES,  CHARTS 

Xin.  Relation  between  maximum  net  and  average  power 

rates  (private  generating  plants) 9M 

XrV.  Ditto  (municipal  generating  plants) 204 

XV.  Prices  charged  per  K.W.H.  for  street  lighting  (gener- 
ating companies) 206 

XVI.  Operating  income  per  KW.H.  sold  — street  lighting 

excluded  (municipal  and  private  generating  plants)  208 


INTRODUCTION 


Having  read  laboriously  through  a  great  mass  of  the 
writing  which  has  appeared  upon  the  subject  of  State  in- 
dustries during  the  last  twenty-five  years,  the  writer  is 
amazed  at  the  futility  of  most  of  the  attempts  to  prove  or 
disprove  the  desirability  of  public  ownership.  Many  who 
have  made  some  study  of  the  data  necessary  for  compara- 
tive purposes  have  entered  upon  the  task  with  strong  pre- 
possessions and  prejudices,  and  have  a<xx)rdingly  seemed 
to  find  the  conclusions  which  they  had  hoped  to  reach. 
Some  have  grievously  ignored  many  significant  considera- 
tions; while  others  have  endeavored  to  particularize  too 
minutely  or  to  prove  too  much.  The  more  careful  his  study, 
however,  the  less  inclined  is  the  investigator  to  draw 
sweeping  conclusions,  and  the  more  ready  will  he  be  to  do 
full  justice  to  both  sides  of  the  argument. 

Probably  the  day  has  passed  for  seriously  debating  the 
feasibility  of  public  ownership  or  operation  of  those  enter- 
prises which  directly  involve  the  health  and  safety  of  a 
community.  Yet  there  remains  a  large  group  of  industries 
which  are  carried  on  primarily  as  commercial  undertak- 
ings. Of  this  group,  electric  lighting  is  the  only  business 
which  has  thus  far  been  generally  attempted  by  public 
bodies  in  the  United  States.  As  to  whether  the  public 
should  engage  in  other  forms  of  activity,  particularly  the 
agencies  of  communication  and  transportation,  the  dis- 
cussion in  the  future  will  doubtless  be  carried  on  with 
increasing  intensity.  In  the  meantime  the  experience 
which  the  United  States  is  gaining  in  the  operation  of  our 
railroads,  and  telephone  and  telegraph  systems  as  a  result 
of  abnormal  war  conditions,  will  furnish  us  with  some  light 
on  the  possibilities  of  a  nationalization  of  these  industries. 


f 


INTRODUCTION 


As  municipal  electric  lighting  is  now  a  well-seasoned 
business  in  this  country,  it  affords  the  most  fruitful  field 
for  an  investigation  of  the  results  of  pubHc  ownership. 
Hence  the  writer,  wholly  impartial,  holding  no  brief  for 
either  side,  has  selected  for  the  present  coniparative  study 
one  small  portion  of  the  field  —  Municipal  Electric  Light- 
ing in  Massachusetts.  This  selection  is  made  because  of 
the  fact  that  probably  for  no  other  public  industry  in  the 
United  States  is  it  possible  to  secure  even  reasonably  com- 
parable data  over  a  period  of  years,  and  adequate  records 
for  the  purpose  are  to  be  found  only  in  the  State  of  Mas- 
sachusetts.^ The  aim  of  this  book  is  to  suggest  and  exem- 
plify those  methods  of  approach  and  investigation  which 
may  most  profitably  be  followed  in  futm^  studies  of  the 
problems  of  municipal  or  state  ownership,  rather  than  to 
make  any  startling  contributions  to  an  already  over- 
worked field. 

Most  of  the  statistical  data  on  which  the  computations 
for  this  study  are  based,  have  been  gathered  laboriously 
from  the  annual  returns  filed  with  the  Massachusetts 
Board  of  Gas  and  Electric  Light  Commissioners  by  the 
individual  electric  plants,  as  well  as  from  numerous  other 
State  documents.  None  of  the  work  at  any  stage  has  been 
delegated  to  others.  In  making  his  selections,  the  writer 
has  carefully  examined  the  returns  of  about  100  municipal 
and  company  plants  for  the  ten-year  period  1905-15.  Of 
these,  72  plants,  all  39  of  the  former  and  32  of  the  latter, 
form  the  basis  of  this  study.  Unfortunately  the  returns  are, 
for  such  comparison  as  is  here  attempted,  distressingly 
inadequate.   Absolutely  no  data  are  worked  out,  and  not 

*  Useful  data  for  a  much  more  extensive  though  probably  less  con- 
cluave  study  are  being  secured  in  connection  with  the  1917  Census  of 
Central  Electric  Light  and  Power  Stations  in  the  United  States,  on  which 
the  writer  is  now  serving  as  the  expert  in  charge.  Some  interesting 
analyses  of  the  available  material  will  be  made  in  the  Fourth  Quinquen- 
nial Report  of  this  industry,  which  is  being  compiled  by  the  author  of 
the  i»€seot  book  and  which  should  be  published  during  the  coming  year. 


INTRODUCTION  $ 

a  single  relation  is  deduced.  Only  the  rawest  of  raw  mate- 
rial is  given.  This  fact  has  necessitated  a  rather  involved 
series  of  computations.  Countless  mathematical  operations 
were  needed  in  order  to  get  the  data  in  such  shape  that 
relations  could  be  determined  and  arranged  for  presenta- 
tion. 

Furthermore,  in  a  majority  of  instances,  the  returns, 
particularly  of  the  municipal  plants,  have  been  revised 
and  corrected  by  a  mass  of  detailed  correspondence  be- 
tween the  Board  and  the  separate  plants.  All  of  this  cor- 
respondence, which  in  many  cases  exceeds  in  volume  the 
returns  themselves,  has  been  carefully  noted.   To  add  to 
the  difficulties  of  the  student,  the  returns,  even  after  this 
auditing  by  the  Board,  have  frequently  been  found  to  be 
exa^peratingly  inconsistent  with  themselves  or  with  those 
of  the  preceding  or  following  years.    This  has  been  par- 
ticularly true  with  regard  to  some  of  the  engineering  data, 
and  the  figures  for  the  connected  load  and  the  output  and 
disposal  of  current.   Under  these  circumstances  the  writer 
has  occasionally  found  it  necessary  to  use  his  best  judg- 
ment in  interpreting  this  material  in  the  light  of  all  the 
data  available.  In  many  cases  the  sunple  information  re- 
quired has  been  absent  altogether.  Mention  will  be  made 
of  all  these  irregularities  as  they  arise  in  course  of  the 
discussion.   Finally,  many  highly  important  data  are  not 
at  present  called  for  by  the  Board. 

The  Annual  Reports  of  the  Board  have  been  of  prac- 
tically no  use  in  this  part  of  the  investigation.  Iq  them 
only  the  barest  general  summaries  of  a  few  items  in  the 
returns  are  given.  And  even  this  material  is  frequently 
inaccurate,  not  because  it  ha^  been  incorrectly  transcribed 
from  the  returns,  but  because  the  data  in  the  returns 
themselves  are  incorrect  or  inconsistent  and  have  not  been 
checked  up.  Needless  to  state,  the  data  for  gas  companies 
have  been  somewhat  more  carefully  worked  out.  It  must 
not,  however,  be  inferred  that  the  writer  speaks  thus 


i  INTRODUCTION 

frankly  for  the  sake  of  criticizing  the  admirable  work  of 
the  Massachusetts  Board  of  Gas  and  Electric  Light  Com- 
missioners. Rather,  he  merely  wishes  to  suggest  some  of 
the  difficulties  which  are  bound  to  beset  any  one  who 
attempts  to  make  a  careful  study  of  the  records  in  such  a 

subject  as  this.^ 

But  a  study  of  this  sort  lacks  life  and  fails  to  command 
the  full  confidence  of  the  pubUc,  if  it  has  consisted  only  of 
an  interpretation  of  the  documents  which  are  filed  away 
in  musty  public  archives,  invaluable  though  they  be.  The 
desirability  of  a  personal,  first-hand  knowledge  of  the 
various  plants  studied,  a  close  acquaintance  with  the  local 
background,  became  increasingly  evident  to  the  writer  as 
his  work  progressed.  Accordingly,  after  having  thoroughly 
and  sympathetically  analyzed  the  recorded  data  for  each 
plant,  after  having  secured  from  all  sources  available  the 
information  which  is  significant,  and  after  having  carefully 
studied  many  of  the  fundamentals  of  the  electric  lighting 
business,  both  theoretically  and  from  a  practical  point  of 
view,  as  revealed  by  typical  plants  which  are  not  on  the 
present  list,  he  arranged  a  pamstaking  survey  of  the  plants 
under  consideration. 

The  methods  used  in  carrying  on  this  portion  of  the 
investigation  are  fully  set  forth  in  the  proper  place.* 
Suffice  it  to  say  in  this  connection,  however,  that  the  18 
municipal  plants  in  the  State  which,  prior  to  1915,  gen- 
erated current,  were  visited,  as  well  as  most  of  the  cor- 
responding group  of  companies.  In  addition,  the  writer 
went  to  a  reasonable  munber  of  the  purchasing  plants 
under  both  forms  of  management.  And,  finally,  by  means 
of  schedules,  extensive  correspondence,  and  conversation 
with  those  in  a  position  to  know,  information  was  secured 

1  In  fairness  it  should  be  said  that  recently  a  few  changes  and  im- 
provements have  been  introduced  in  the  return  forms  and  in  the  yearly 
reports,  in  accordance  with  suggestions  which  the  i(VTiter  has  from  time 
to  time  made. 

*  Chapter  x. 


INTRODUCTION  $ 

regarding  the  less  important  plants,  which  it  was  not  pos- 
sible, and  probably  not  necessary,  to  inspect  in  person. 

For  the  most  part  the  data  thus  secured  have  been  dis- 
cussed separately.  The  conclusions  reached  through  this 
portion  of  the  study  have  been  further  tested  by  the  facts 
already  known,  and  have  in  turn  served  as  a  check  upon 
the  deductions  drawn  from  more  purely  statistical  sources. 
Conducting  the  survey  without  prejudice,  the  writer  was 
pleasantly  siuprised  to  find  how  closely  the  results  arrived 
at  by  the  different  methods  correspond. 

From  time  to  time  it  has  been  necessary  to  consult  a 
number  of  Massachusetts  State  Bureaus  in  order  to  obtain 
information  not  in  published  form  as  well  as  to  receive 
suggestions  regarding  the  correctness  of  some  of  the  writ- 
er's deductions.  Among  these  may  be  mentioned  the 
Bureau  of  Statistics,  the  Waterways  and  Pubhc  Lands 
Commission,  the  Highway  Commission,  the  departments 
of  the  Secretary  of  the  Commonwealth,  the  Tax  Commis- 
sioner, and  the  State  Forester,  and  the  Industrial  Accident 
Board.  Certain  information  has  also  been  obtained  from 
the  Federal  Census  Bureau  at  Washington. 

The  writer  is  greatly  indebted  to  the  Massachusetts 
Board  of  Gas  and  Electric  Light  Commissioners  for  the 
courtesy  which  they  have  shown  in  answering  his  numer- 
ous questions  and  giving  him  access  to  the  documents  in 
their  possession.  Also,  at  various  stages  of  his  work,  he  has 
conferred  with  or  written  to  a  long  list  of  persons  who  are 
thoroughly  conversant  with  some  phase  of  the  subject 
under  investigation,  including  men  who  are  actively  en- 
gaged in  private  or  public  electric  light  and  power  business, 
electrical  engineers,  public  utility  experts,  accountants, 
lawyers,  professors,  municipal  officials,  and  members  of 
State  commissions.  To  all  of  these,  many  of  whom  have 
contributed  valuable  suggestions  or  have  confirmed  the 
interpretations  developed  in  this  study,  a  general  acknowl- 
edgment is  here  made. 


6 


INTRODUCTION 


Separate  mention  should  be  made  of  the  debt  which  the 
writer  owes  to  the  managers  of  the  municipal  electric  light 
plants  in  the  State  as  well  as  to  the  oflScers  and  managers 
of  the  numerous  private  plants  visited  for  purposes  of  com- 
parison. Had  it  not  been  for  the  interest  which  many  of 
them  have  taken  in  the  investigation  and  the  personal 
kindness  received  at  their  hands,  it  would  have  been 
impossible  to  secure  some  of  the  most  important  informa- 
tion included  in  the  present  study.     ' 

Finally,  it  is  but  fair  to  state  that,  whatever  the  author 
may  owe  to  others  for  information  regarding  the  facts 
involved,  he  has  been  absolutely  independent  in  his  method 
of  handling  the  material  at  his  disposal  and  in  drawing 
conclusions  therefrom.  When  the  truth  about  public 
ownership  is  so  beclouded  by  a  mass  of  conflicting  evidence 
and  biased  opinion,  and  when  so  many  personal  interests 
are  at  stake,  it  behooves  the  scientific  student  to  weigh 
well  his  thoughts  and  to  state  as  a  fact  only  that  which  he 
has  carefully  verified;  but,  having  taken  these  precautions, 
he  should  speak  out  boldly,  no  matter  whose  ox  is  gored. 
Accordingly,  the  writer  himself  assumes  full  responsibihty 
for  the  findings  herein  presented,  and  trusts  that  the  sub- 
ject has  been  so  handled  that  the  reader  will  be  convinced 
of  the  fairness  of  the  conclusions  which  are  reached. 


Nate  to  Readers:  In  conclusion  it  may  be  helpful  for  the 
writer  to  suggest  those  portions  of  this  study  which  can  be 
read  to  most  advantage  by  the  different  classes  of  readers, 
for  not  every  one  has  the  leisure  required  for  mastering  the 
details  of  a  scientific  book.  The  general  reader  will  be  most 
interested  in  chapter  xiv,  which  broadly  summarizes  the 
more  important  conclusions,  in  chapters  x  to  xni,  inclu- 
sive, in  which  the  results  of  the  Local  Survey  are  discussed, 
and  possibly  in  the  summaries  at  the  end  of  chapters  v  to 
IX,  inclusive.  The  more  careful  student  of  affairs  will  no 
doubt  wish  to  add  chapters  i  to  in,  and  probably  chapter  ix 


INTRODUCTION  7 

and  the  summary  at  the  end  of  chapter  iv.  Accountants 
will  doubtless  find  some  food  for  thought  in  chapters  v  to 
VIII,  engmeers  may  be  particularly  interested  in  chapter 
IV,  while  public  utility  experts  will  naturally  turn  to  all 
of  the  chapters  from  iv  to  viii.  These  three  classes,  also, 
should  find  it  profitable  to  examine  the  Statistical  Appen- 
dix. But  active  men  in  public  or  in  private  electric  light 
and  power  business,  as  well  as  commissioners  and  thorough 
students  of  pubhc  finance,  will  do  well  to  read  all  of  the 
chapters  consecutively,  in  order  fully  to  appreciate  the 
nature  of  the  problems  involved  and  the  sign^cance  of  the 
conclusions  reached. 


< 


THE  RESULTS  OF 

MUNICIPAL  ELECTRIC  LIGHTING 

IN  MASSACHUSETTS 


CHAPTER  I 

A  SURVEY  AND  CKITICISM  OP  THE  LITERATURE  ON  THE 
SUBJECT  OF  MUNICIPAL  ELECTRIC  LIGHTING  IN  THE 
UNITED  STATES 

Though  the  first  municipal  electric  lighting  plant  in  the 
United  States  began  to  operate  in  1881,i  it  was  more  than 
ten  years  later  before  students  of  public  questions  began  to 
take  any  marked  interest  in  this  form  of  public  activity. 
For  the  entire  electrical  industry  this  was  a  period  of 
experiment  —  a  time  when,  according  to  the  well-known 
dictum  of  the  economists,  it  was  obviously  most  unwise 
for  public  authorities  to  risk  the  money  of  the  taxpayers. 
Yet,  probably  due  to  the  fact  that  many  of  the  smaller 
towns  could  not  offer  sufficient  inducements  to  private 
capital,^  the  increase  in  number  of  publicly  owned  stations 
was  comparatively  rapid.  In  1892,  so  far  as  it  can  be  ascer- 
tained, the  entire  number  was  235,  or  16.2  per  cent  of  all 
central  stations  in  the  country.  ^  Ten  years  later  we  find 
an  increase  of  almost  250  per  cent,  to  815,  or  22.5  per  cent 
of  the  total;  *  while  at  the  end  of  twenty  years,  in  1912,  the 
number  stood  at  1562, 29.9  per  cent  of  the  total,  an  increase 
of  565  per  cent  for  the  period.^    The  number  of  private 

*  Central,  1902 : 7;  but  cf .  Mun.  Monop. :  203-204. 

«  Ibid.,  1902:  IS;  1907:  28.  »  Ibid.,  1902: 7.  «  Ibid. 

»  Ibid.,  1912: 17.  Though  exact  figures  are  not  available,  it  is  probable 
that  the  number  is  at  present  20  or  25  higher  than  here  giveii.  a. 
McGraw,  and  Thompson. 


10 


MUNICIPAL  ELECTRIC  LIGHTING 


plants,  on  the  other  hand,  increased  from  1,219  in  1892  * 
to  2,805  in  1902,2  and  3,659  in  1912, ^  a  growth  of  130  per 
cent  for  the  ten-year  period  and  of  only  200  per  cent  during 
twenty  years.* 

Lest  the  foregoing  figures  should  be  misleading,  some 
further  comparisons  and  explanations  are  called  for  in  this 
connection.  In  the  first  place,  on  account  of  the  frequent 
combmation  and  amalgamation  of  private  plants  during 
the  past  fifteen  years  or  more,  the  census  reports  at  a  given 
time  fail  to  show  the  real  addition  in  numbers  over  a  period 
of  years.  Also,  in  some  cases,  data  have  been  returned  as 
if  for  a  single  station  when  in  reality  they  covered  a  group 
of  separate  plants  operated  by  a  single  management.^ 
Needless  to  state,  these  restrictions  do  not  apply  in  the 
case  of  municipal  plants. 

Here,  further,  we  must  observe  that,  while  the  number 
of  municipal  plants  was  increased  by  SIO  during  the  period 
1907-1912,  a  growth  of  about  25  per  cent,  the  increase  in 
the  number  of  company  plants  between  these  dates  was 
less  than  6  per  cent.  This  difference  points  to  some  rather 
important  conclusions.  The  private  plants  appear  to  have 
been  aware  of  tiie  great  advantages  usually  to  be  gained 
from  consolidation  and  large-scale  operation  in  the  electric 
light  and  power  business,  and  to  have  acted  accordingly. 
The  public  plants,  on  the  contrary,  have,  from  the  very 
nature  of  the  case,  been  unable  or  unwilling  to  follow  this 
policy.  They  have  been  prevented,  no  doubt,  by  local  jeal- 
ousies, by  the  fact  that  they  are  often  widely  scattered, 

*  Central,  1902:  7;  but  cf.  Mun.  Monop. :  203-204. 

*  Cf.  ibid.,  1902:  8,  6, 158;  118  central  stations  operating  in  connection 
with  street  railways  are  not  included  in  the  number  given. 

»  Ibid.,  1912: 17,  18;  169  stations  operated  by  street  railways  are  not 
included. 

4  To  complete  the  data  for  the  electric  light  and  power  business  in  the 
United  States,  the  isolated  stations,  probably  amountmg  to  75,000 
should  be  added.  Cf.  Central,  1902:3;  1907:  14;  1912: 17;  also  Census, 
N.Y.,  1890: 242. 

»  Central  1907: 28;  1912: 15.  20;  U.S.  Labor,  xiv:  536. 


IN  MASSACHUSETTS 


11 


and  perhaps  by  legal  difficulties.  Accordingly,  though 
the  merging  of  the  former  has  been  very  frequent,  there  is 
a  record  of  only  five  such  cases  among  the  latter  during 
the  years  1902-1912.1  As  a  result  of  the  present  war 
conditions,  the  incentives  to  combination  have  doubtless 
been  increased  to  such  an  extent  that  there  are  now,  in 
all  probability,  fewer  independent,  privately  owned  cen- 
tral stations  than  in  1912. 

Nor  should  we  overlook  the  fact  that,  in  1902,  82.3  per 
cent  of  the  municipal  plants  were  in  towns  having  less  than 
5,000  population,  while  in  1912  the  percentage  had  risen 
to  85.1;  2  in  spite  of  the  very  considerable  growth  in  popu- 
lation within  the  period  which  had  elapsed.  This  fact,  of 
course,  clearly  indicates  that  municipahzation  of  the  indus- 
try is  being  confined  in  the  main  to  the  very  small  places, 
where  frequently  private  concerns  have  not  cared  to  go, 
and  where  the  problems  of  operation  are  comparatively 
simple.'  Hence  it  is  reasonable  to  infer  that  taost  of  the 
territory  which  seemed  desirable,  so  far  as  private  capital 
is  concerned,  has  been  for  some  time  developed  —  another 
cause  for  the  less  rapid  increase  in  the  number  of  private 
plants. 

Again,  it  is  interesting  to  note  that,  while  the  invest- 
ment in  municipal  plants  was,  in  190s5,  4.4  per  cent  of  the 
total  for  both  groups,*  it  had  declined  in  1912  to  3.5  per 
cent,*^  a  proportionate  decrease  of  20.5  per  cent,  in  spite 
of  a  proportionate  increase  in  numbers  of  33  per  cent. 
Likewise  the  kilowatt  hours  output  of  the  public  plants 
decreased  from  7.8  per  cent  of  the  total  in  1902  ^  to  only 
4.7  per  cent  in  1912,  a  proportionate  decrease  of  42.3  per 
cent.^  These  relations  appear  clearly  in  the  accompanying 
table. 

1  Cf.  ibid.,  1907:  29,  and  1912: 22.  «  Ibid.,  1912:  23.  f 

•  The  recent  municipalization  of  the  Cleveland  plant  is  a  conspicuous 
excephon.  It  must  be  remembered,  however,  that  this  plant  serves  only 

*  ?*!rl  ^I  ^^  ""'^y-  *  Central.  1902 : 6. 

^  »  Ibid.,  1912: 66.        •  Ibid.,  1902: 6.         »  Ibid.,  1912: 17 


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IN  MASSACHUSETTS 


13 


Finally,  attention  should  be  called  to  the  fact  that  170 
private  plants  were  transferred  to  public  ownership  before 
1902  ;i  113  additional  transfers  were  made  between  1902 
and  1907;2  and  106  more  between  the  latter  date  and  1912.» 
On  the  other  hand,  while  only  13  municipal  plants  changed 
to  private  ownership  before  1902,^  and  perhaps  as  many 
more  were  abandoned,*^  there  is  a  record  of  38  more  cases 
of  this  sort  between  1902  and  1907;®  and  a  still  more 
marked  increase  of  97  transferred  and  abandoned  stations 
during  the  next  period  of  five  years  J  ^ 

With  these  general  data  as  an  introduction,  it  will  be 
the  purpose  of  this  chapter  to  review  briefly  the  numerous 
attempts  which  have  been  made  to  compare  public  and 
private  electric  lighting  and  power  business  in  the  United 
States,  as  well  as  to  indicate  sources  which  may  be  useful 
for  such  purposes.  The  first  compilation  sufl5ciently  exten- 
sive to  be  of  much  use  was  made  by  the  United  States 
Bureau  of  the  Census  in  1890,  under  the  direction  of 
Allen  R.  Foote.»  Though  at  this  time  there  were  about  800 
central  stations  in  the  country,  of  which  more  than  100 
were  publicly  owned,io  the  survey  was  confined  to  the  139 
private  plants  in  the  State  of  New  York,  —  no  data  being 

»  Central  1902: 7,  8.  *  Ibid.,  1907: 28. 

»  Ibid.,  1912:  22.  *  Ibid.,  1902: 13. 

•  Francisco,  1900: 22-28  (also  Grant  and  Marston). 

•  Central,  1907:29. 

»  Ibid.,  1912: 22.   These  changes  are  shown  in  the  following  table:  — 
Table  2.  Chamqes  in  Ownebship 


Charader  of  Change 


Prom  private  to  public    

From  public  to  private 

Public  plants  gone  out  of  operation , 


B^ore  1902 


170 
13 
18(?) 


1902-1907 


113 

83 

5 


1907-191$ 


106 
80 
17 


8  In  addition  it  is  probable  that  from  75  to  100  plants  formerly  pro- 
ducing their  cmrent,  are  now  operating  only  their  distributing  system, 
thus  losing  a  large  part  of  their  investment.  Of.  Central,  1912:  48  (also 
Grant  and  Marston). 

*  Census,  N.Y.,  1890:  239-265.        "  Ibid.:  249. 


I 


M  MUNICIPAL  ELECTRIC  LIGHTING 

letumed  for  the  lone  municipal  plant  of  Dunkirk.  Some 
data  are  given  regarding  the  capital  account;  incomes  and 
expenditures  are  roughly  summarized;  and  no  record  is 
made  of  interest  or  depreciation.  Stations  are  rudely  classi- 
fied with  respect  to  the  kind  of  power  used,  the  type  of 
engines  installed,  and  the  candle  power  of  their  lamps.  The 
report  affords  merely  an  historical  interest  to  the  student, 
as  it  was  the  first  effort  made  by  the  public  to  find  out 
about  an  industry  already  ten  years  old.  Almost  ten  more 
years  were  to  elapse  before  a  second  survey  was  made. 

In  1894  there  appeared  a  book  on  "Electric  Lighting 
Plants,"  by  W.  J.  Buckley,  a  salesman  for  an  electrical 
concern.  A  good  deal  of  interesting  information  is  given 
regarding  the  cost  and  operation  of  central  stations  based 
on  data  received  from  most  of  the  plants  in  this  country 
and  Canada.  Among  other  things  he  states  that  the  aver- 
age depreciation  of  a  plant  is  about  8.7  per  cent  yearly;  * 
that  the  cost  of  fuel  averages  30  per  cent  of  the  total 
maintenance  account,^  and  the  cost  of  labor  36  per  cent.' 
He  tabulates  brief  reports  from  more  than  50  municipal 
plants  and  from  twice  as  many  private  stations,^  without, 
however,  attempting  to  draw  any  particular  conclusions. 
An  observation  is  made  to  the  effect  that  the  larger  the 
city,  under  mimicipal  ownership,  the  greater  is  the  propor- 
tionate cost  of  maintenance.^  Finally,  it  is  noticeable  that 
no  interest  or  depreciation  is  charged  against  the  municipal 
plants  cited. 

In  the  latter  part  of  the  same  year  a  report  by  Horatio 
A.  Foster,  electrical  engineer  and  accountant,  was  published 
in  the  "Electrical  Engineer."  ®  This  report  was  based  upon 
the  replies  to  a  uniform  letter,  accompanied  by  a  carefully 
prepared  schedule,  which  was  sent  by  the  editor,  T.  C. 
Martin,  to  the  officials  of  150  public  plants.  Though  it 
was  avowedly  an  impartial  attempt  to  ascertain  whether 


»  Buckley:  5,  6. 

*  Ibid.:  5,  6,  250-255. 


*  Ibid.:  11. 
'  Ibid.:^S. 


'  Ibid. :  18. 

•  Elec.  Eng.,  xvm:  181-189. 


IN  MASSACHUSETTS  u 

the  advantages  ascribed  to  municipal  ownership  had  been 
"assumed  rather  than  proved,"  only  42  blanks  were  re- 
turned.  From  the  scanty  data  thus  received,  many  of  the 
returns  being  only  partially  filled,  it  was  clear  that  the 
public  bookkeeping  was  in  a  bad  state.  Only  2  plants 
made  allowance  for  depreciation,  and  only  17  made  any 
effort  to  compute  interest  upon  their  debt,  the  average  rate 
being  about  5  per  cent. 

After  carefully  analyzing  his  meager  material,  Foster 
reaches  conclusions  which  may  be  summarized  as  foUows: 
(a)  the  labor  cost  is  somewhat  less  than  that  of  private 
plants;  (6)  the  investment  cost  per  kilowatt  capacity  of  the 
pubhc  plants  is  no  higher  than  that  of  the  average  private 
plant  of  like  size;  (c)  at  least  half  of  the  plants  studied  are 
m  places  too  small  to  support  a  private  plant.  So  far  as 
rates  are  concerned,  he  finds  that  (d)  the  14  comparable 
public  plants  charge  considerably  more  for  current  than 
do  pnvate  ones.   And,  finally,  (e)  after  charging  against 
the  commercial  income  from  whatever  source,  if  such 
there  be,  interest  on  the  total  investment  and  depreciation 
at  7.5  per  cent,  in  addition  to  the  operating  expenses,  he 
estimates  the  real  cost  of  street  lighting  to  be  higher  than 
the  rates  charged  for  similar  service  by  companies,  and 
highest  m  the  ca^  of  those  municipal  plants  which  do  a 
commercial  lighting  business,  for  which  the  rates,  as  he 
thinks,  are  usually  put  too  low. 

Though  no  account  is  taken  of  the  taxes  lost  by  the  town 
which  owns  Its  plant,  as  well  as  of  a  number  of  other  items 
which  might  reasonably  be  included  in  the  cost,  the  hi-h 
rate  of  depreciation  wiU  offset  the  omissions,  as  well  Is 
the  mterest  rate  allowed,  6  per  cent,  which  may  be  in  some 
eases  too  high.  Upon  the  whole,  however,  he  is  to  be  com- 
mended  for  his  fairness  and  orderly  method  of  investiga- 
^on  Needless  to  say,  such  inadequate  data  are  practicaUy 
worthless  for  comparative  purposes.  Yet,  since  under  the 
circumstances  the  most  prosperous  pubHc  plants  probably 


II 


16  MUNiaPAL  ELECTRIC  LIGHTING 

made  returns,  it  is  certain  that  private  business  suffered 
nothing  in  comparison. 

In  1895  M.  J.  Francisco,  a  man  o!  considerable  experi- 
ence in  the  electrical  business,  published  a  booklet  entitled 
"Municipal  Ownership:  Its  Fallacy,"  ^  in  which,  after 
studying  about  forty  plants  from  all  parts  of  the  country,* 
he  concludes  that  municipal  ownership  is  a  decided  finan- 
cial failure  when  depreciation,  interest  on  total  investment, 
and  other  items  are  taken  into  account.    In  the  first  edi- 
tion, as  well  as  m  the  later  ones  of  1898  and  1900,  he 
endeavors  to  compare  the  cost  per  lamp  hour  and  the 
number  of  candle  power  per  hour  furnished  for  one  cent 
in  the  two  classes  of  plants  —  a  most  elusive  sort  of  com- 
parison when  one  realizes  the  vagaries  of  "rated"  candle 
power,  even  at  the  present  time.   In  the  1900  edition  he 
attempts  some  sweeping  comparisons  between  154  public 
and  222  private  plants.'    He  further  gives  a  list  of  31 
municipal  plants  sold  or  abandoned;*  and  he  is  so  con- 
stantly asserting  that  public  plants  are  in  places  too  small 
to  offer  paying  business  to  private  enterprise,^  that  one 
feels  incUned  to  wonder  why  he  attempted  to  make  any 
comparisons  at  all  if  matters  really  stood  thus.  Upon  the 
whole,  Francisco  is  so  bitter  against  every  form  of  pubUc 
ownership,  assuming  that  practically  every  official  is  either 
a  crook  or  an  ignoramus,  he  presents  his  material  in  such 
a  disorderiy  manner,  and  takes  the  reader  so  Uttle  into  his 
confidence,  that  his  weU-meant  efforts  might  be  passed 
over  in  silence,  were  it  not  for  the  fact  that  for  ten  years 
he  secured  a  good  deal  of  attention  from  both  the  oppo- 
nents and  the  advocates  of  state  industry.® 

1  As  the  writer  has  been  unable  to  find  a  copy  of  this  edition,  his  first- 
hand impressions  are  gained  from  a  study  of  the  later  and  more  complete 
editions  of  1898  and  1900. 

2  Cf .  Mun.  Monop, :  70-71.  »  Francisco.  1900 :  39-43. 

*  Ibid.:  22-28.  •  Ibid.:  Si-57. 

•  Cf .  the  vuTilent  criticisms  of  Commons,  in  Mun.  Monop. :  55-180, 
passim;  also  Parsons,  in  the  Arena,  infra. 


IN  MASSACHUSETTS  ff 

It  next  becomes  our  unpleasant  task  to  mention  one  of 
the  most  erratic  investigations  of  the  subject  that  has  ever 
been  made,  that  of  Professor  Frank  Parsons,  of  Boston 
University,  who  burst  into  print  with  a  truly  astounding 
senes  of  articles  on  "The  People's  Lamps,"  appearing  in 
four  numbers  of  the  "Arena"  in  1895.   While  it  appears 
that  he  had  carefully  studied  many  of  the  technical  fea- 
tures of  the  business,  and  while  he  went  to  an  enormous 
amount  of  work  to  secure  data  from  about  200  pubUc 
plants,  his  ardent  enthusiasm  for  the  cause  of  mum'cipal 
ownership  led  him  to  belittle  difficulties  and  distort  facts 
Begmmng  with  the  wild  assertion  that  "the  prices  of 
wheat,  com,  cotton,  and  other  commodities  open  to  com- 
petition are  nearly  uniform  aU  over  the  Union,  but  it  does 
not  seem  to  be  so  of  electric  Kghts,"  i  he  proceeds  to 
prove  by  hook  or  crook  that  public  lighting  invariably 
costs  the  people  less  than  lighting  by  private  plants. 

Giving  no  details  about  time  or  local  conditions,  he  cites 
13  "  before  and  after  "  cases  to  show  that  there  was  a  saving 
of  from  one  half  to  five  sixths  as  a  result  of  the  change  from 
pnvate  to  pubHc  ownership.*  He  is  delighted  to  find  that 
m  20  cases  of  municipal  ownership,  the  street  Hghting  was 
secured  for  nearly  nothing,  or  even  a  profit  was  made,  be- 
cause of  the  income  from  the  commercial  business.^ '  He 
further  attempts  to  prove,  by  selecting  from  a  table  of 
42  pubUc  and  60  private  plants,  that  lower  commercial 
rates  are  charged  by  the  former.*  It  is  interesting  to  note 
however,  that  only  7  of  the  20  municipalities  securing 
then-  street  Hghting  so  cheaply  are  included  in  this  list, 
and  that  no  account  is  taken  of  minimum  charges,  dis- 
counts, etc.  Yet  he  is  pleased  to  state  that  private  plants 
charge  "from  twice  to  tenfold"  as  much  as  public  plants.' 
When  he  finds  that  "under  private  control  the  labor  costs 
of  the  Chicago  street  arcs  would  have  been  only  $17.50 


*  Arena,  xin:119. 

*  Ibid.:  894-395. 


*  im.:  381. 
•/Wa.:S95. 


•  /iut:  391-392. 


I 


18  MUNICIPAL  ELECTRIC  LIGHTING 

per  year  instead  of  $52.60,"  thus  making  the  total  cost 
only  $61  in  place  of  $96  per  arc,  he  contends  that  for  com- 
parison with  private  business  the  lower  figure  should  be 
used,  as  the  increased  expense  was  due  to  "pohtics"  and 
not  to  the  "economics"  of  the  business,^  though  m  other 
places  he  argues  that  labor  is  infinitely  better  off  under 
public  ownership!  In  another  place  he  contends  that 
Boston  would  save  $800,000  annually  by  ownmg  her  own 
lighting  plant  ^  —  but  enough  of  this. 

In  computing  the  investment  per  kilowatt  capacity.  Par- 
sons  makes  no  distinctions  between  large  and  small  plants, 
and  gives  practically  no  interpretation  or  information  ex- 
cept that  the  average  is  much  less  for  pubUc  plants.'  So  far 
as  the  fixed  charges  are  concerned,  he  grudgingly  admits 
that  municipalities  should  consider  insurance,  and  taxes 
k)st-  but  interest,  after  the  bonds  are  paid,  and  depreciation, 
are  not  properly  a  part  of  the  cost  of  fighting.  To  include 
interest  on  the  total  mvestment  in  such  cases,  when  com- 
puting the  cost  of  fighting,  wouW  be  from  his  point  of  view 
merely  to  take  money  out  of  one  pocket  and  put  it  mto 
the  other.  The  people  do  not  have  to  pay  interest  to  them- 
selves. Then,  too,  he  considers  interest  a  fundamentaUy 
immoral  thing.  No  percentage  need  be  aUowed  for  depre- 
ciation because,   (a)   on  the  average,   appreciation  wiU 
about  cancel  depreciation,  (6)  fittie  is  written  off  for  depre- 
dation by  private  plants,  and  (c)  to  make  allowance  for 
depreciation  each  year  is  reaUy  equivalent  to  givmg  the 
capitafist  back  his  capital  twice!  * 

In  view  of  his  strange  mental  bias  it  is  not  safe  to  accept 
any  of  Parsons'  "facts"  as  such.  It  is  hard  to  befieve  that 
four  years  later  Professor  Commons  would  refer  with  pride 
to  his  "extensive  investigations"  as  "the  most  painstakmg 
and  exhaustive  statistical  analysis  of  electric  lightmg  yet 
made  from  the  standpoint  of  those  who  favor  mumcipal 


»  Arena,  xm:  S82. 
»  JWd.,  xiv:8»-92. 


«  /6id.:10»-l06. 109. 


IN  MASSACHUSETTS 

ownership."!    It  is  still  more  startling  to  find  him  men- 
tioned twelve  years  later  as  "one  of  the  greatest  authorities 
on  economics  and  political  science  in  America,"  2  and  about 
the  same  time  appointed  one  of  the  committee  to  sum 
up  the  evidence  for  the  National  Civic  Federation  Reportl 
It  was  several  years  before  any  further  investigations 
of  note  were  carried  on.  However,  in  1896  Hon.  Nathan 
Matthews,  of  Boston,  in  a  "Report  to  the  Selectmen  of 
Urookhne"  regarding  a  municipal  arc-fight  plant,  pre- 
pared a  table  showing  the  real  cost  of  street  fights  in  eleven 
towns  owning  their  own  plants.^  He  also  points  out  some 
of  the  errors  mto  which  past  investigators  have  faUen. 
Iwo  years  later  he  published  another  "Report  on  the 
Comparative  Cost  of  Public  Lighting,-  in  which  he  makes 
a  study  of  the  street  lighting  problem  in  seven  large  cities 
of  the  country  and  attempts  to  draw  conclusions  with 
regard  to  equitable  rates  in  Boston.    In  his  method  of 
atta<jking  diflSculties  and  efiminating  differences  he  has 
done  some  useful  pioneer  work  on  a  smaU  scale,  particu- 
larly m  discussing  the  municipal  plants  of  Detroit  and 
Chicago.*  During  this  year  also,  the  Massachusetts  Board 
of  Gas  and  Electric  Light  Commissioners  for  the  first  time 
tabulated  suflicient  data  regarding  the  fourteen  municipal 
plants  m  the  State  to  enable  the  student  to  make  a  few 
general  comparisons  between  pubfic  and  private  business.^ 
Fmally ,  late  m  1 897,  Professor  John  R.  Commons  published 
an  article «  which  was  later  incorporated  in  his  contribu- 
tion to     Municipal  Monopofies"  and  which  wiU  be  dis- 
cussed in  that  connection.^ » 

*  ^f  A^ •  ^'""t  ^^'  '  ^tti^e^s,  Rept.  Camp. :  22-36. 

a  JZ^^h^i^t'u"^'-  '"' ''  ^"°^  ^  '^^^^ remsTkaUe  extract  from 

m^KSgh^^.  ""^""  ^  '''-^^''  -  ^«  -^i-t  of 

"  For  data  on  private  plants  at  this  time  the  best  sources  ««»  th*. 

IX  «ff cfl  r '"'Tp';^  E.  I,.  Powers,  Chi.^!  I^^JbZ 
tm  No.  4118,  of  the  General  Electric  Company,  Schenectady,  1887. 


Il 


80 


MUNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


21 


I' 


1 

I 


' 


The  next  serious  attempt  to  study  this  mooted  question 
on  a  large  scale  was  made  in  the  well-known  book  "Muni- 
cipal Monopolies,"  first  published  in  1899.  The  three 
articles  entitled  "Municipal  Electric  Lighting,"  "The 
Latest  Electric  Light  Reports,"  and  "Validity  of  Electric 
Light  Comparisons,"  by  Professors  John  R.  Commons, 
Edward  W.  Bemis,  and  F.  A.  C.  Perrine  respectively,  are 
deserving  of  some  attention,^  though  the  last  of  the  three 
men,  a  professor  of  engineering,  is  the  only  one  who  con- 
tributed anything  new  to  the  discussion. 

Commons,  setting  out  to  prove  that  municipal  owner- 
ship of  electric  lighting  is  a  highly  desirable  thing,  man- 
fully shoulders  his  "burden  of  proof."  ^  Then  he  proceeds 
to  "correct"  the  estimates  of  Foster,  Francisco,  and  Par- 
sons as  to  the  cost  of  Ughting  in  public  plants,  stating 
naively  that  all  of  their  estimates,  even  including  those  of 
Parsons,  in  whose  figures  he  seems  to  place  great  confi- 
dence, are  "above  the  estimates  made  by  the  municipal 
oflBciais  themselves  M,  and  generally  above  my  own 
estimates."  ^  After  a  long  and  tiresome  discussion  of  the 
stale  figures  on  lamp-hour  costs,  in  the  course  of  which  he 
interpolates  a  few  elementary  observations  on  the  "load 
curve,"  *  he  discovers  that  "rated"  candle  power  of  lamps 
furnishes  a  very  unsatisfactory  basis  of  comparison,  and 
that  "quaUty  of  Ught"  and  "outages"  should  be  given 
more  attention.^    Having  discovered  that,  in  the  UtUe 
public  plant  of  Dunkirk,  New  York,  the  street  fights  are 
unusuaUy  briUiant,  and  having  found  that  in  the  one  city 
of  Detroit  the  hours  of  "outage"  were  greater  under  pri- 
vate ownership  than  under  pubHc  ownership  two  years 
later,  he  draws  the  sweeping  inference  that  "such  facts  as 
these  not  only  may  give  us  confidence  that  municipal  enter- 
prise does  better  work  than  private  companies  in  the  field 
of  electric  lighting,  but  they  also  lead  us  to  look  with  sus- 


1  Mun.  Monop.:  55-180;  18S-285;  286-296. 
9  Jbid.:69.  « /6id.:  83-85. 


«  Ibid.: 55. 

»  /Wd.:  168-173. 


picion  upon  any  statistics  favoring  private  operation  which 
are  based  upon  candle-power  cost,  even  if  conscientiously 
compiled."  ^ 

In  conclusion,  he  feels  reasonably  certain  that  his  studies 
have  shown  "that  the  great  majority  of  the  three  hundred 
cities  and  villages  now  furnishing  light  are  actually  getting 
better  service  at  less  cost  than  those  which  depend  upon 
private  companies."  2  He  has  little  fear  of  "politics,"  but 
does  recommend  a  few  reforms  as  "necessary  to  accom- 
pany or  precede  municipal  ownership";  namely,  (a)  State 
supervision  for  cities,  (b)  the  substitution  of  unsalaried 
commissions  for  the  boards  of  aldermen,  (c)  the  initiative 
and  referendum,  and  {d)  a  civil  service  reform  system.' 

Perhaps  Commons'  method  of  disposing  of  the  fixed 
charges  under  municipal  ownership  should  be  outlined, 
since  his  conclusions  are  so  generally  accepted  by  super- 
ficial advocates  of  municipal  ownership.    ReaHzing  that 
the  real  cost  of  street  lighting  to  towns  owning  their  plants 
will  be  high  or  low  in  proportion  to  the  fixed  charges  that 
are  weighed  against  them,  he  makes  an  effort  to  minimize 
the  importance  of  taxes,  insurance,  interest,  and  deprecia- 
tion.   Interest,  he  says,  should  be  computed  only  upon 
the  outstanding  indebtedness,  not  upon  the  entire  cost  of 
the  plant,  because  the  taxpayers  have  really  contributed 
nothing,  simie  the  municipality  would  be  getting  its  lights 
for  less  than  would  have  been  paid  to  a  private  concern, 
and  hence  they  would  have  had  no  alternative  use  for  their 
money.4  Regarding  taxes,  he  feels  that  the  loss  of  income 
from  that  source  by  towns  owning  their  plants  "is  more 
than  compensated  by  the  increased  valuations  of  property 
which  follow  upon  increased  municipal  lighting."  ^    Insur- 
ance need  not  be  carried  by  large  cities,  because  a  "loss 
by  fire  when  spread  over  the  tax-rolls  would  cause  but  an 
insignificant  increase  in  taxes." « 


*  Mun.  Monop. :  173. 

*  Ibid. :  99-102. 


*  Ibid. 

*  Ibid.:  104, 


»  Ibid.:  17^180. 
■  Ibid.:  108. 


n 


MUNICIPAL  ELECTRIC  LIGHTING 


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93 


f 


His  treatment  of  the  subject  of  depreciation  is  a  curious 
mixture  of  fallacies  and  contradictions.  He  inclines  to  the 
view  that  public  plants  need  make  no  allowance  for  this 
item  because  few  private  plants  do  so.'  As  the  chief  aim 
of  a  public  plant  is  to  give  low  prices,  no  reserve  should 
be  accumulated. 2    Depreciation  by  "use"  will   be  taken 
care  of  in  the  operating  expenses,  while  depreciation  by 
"competitive  improvements"  and  by  "replacement"  are 
not  a  part  of  the  costs  of  street  hghting  for  a  plant  which 
does  no  commercial  business,^  as  the  tax  levy  will  easily 
take  care  of  such   charges.    A  depreciation  fund  is  an 
absurdity,  but  a  sinking  fund  is  wise  because  otherwise 
the  public  debt  "creates  an  idle  class,  living  on  fixed  and 
guaranteed  incomes."  *   He  seems  not  to  realize  that  when 
the  bonds  are  paid  off  under  such  a  scheme  of  financing 
the  town  might  have  nothing  but  a  junk-heap  on  its  hands, 
or  in  lieu  of  that  a  new  debt  greater  than  the  original  one. 
Throughout,  Conmions  stresses  the  view  that  public  busi- 
ness is  not  subject  to  the  same  standards  as  private  busi- 
ness and  need  not  be  carried  on  in  the  same  way.   How 
any  comparisons  of  the  two  classes  of  business  could  be 
made  under  such  conditions,  is  a  mystery. 

Bemis  gives  a  complete  Ust  of  the  S53  public  plants, 
13.5  per  cent  of  the  total  number  in  the  country,  according 
to  his  survey,  grouped  according  to  States,  together  with 
a  table  showing  the  age  of  143  of  them.^  After  studying  in 
a  general  sort  of  way  the  32  public  and  76  private  plants 
in  Michigan,  and  after  a  hurried  analysis  of  the  situation 
in  Massachusetts,  he  decides  that  the  average  commercial 
rate  for  public  plants  is  decidedly  lower  than  for  private.' 
Then  he  compares  74  municipal  plants  with  132  private 
stations,  grouping  them  according  to  the  number  and 
candle  power  of  their  lamps,  the  hours  of  use,  and  the  cost 
of  fuel.  His  conclusion  is  that,  even  when  5  per  cent  interest 


»  Mun.  Monop. :  109-113. 
«  /tkf.:  125-128. 


«  Ibid.: U5. 
i  /Wd.:  188-206. 


»  Ibid.  :n&-ll9. 
•  Ibid.'.nS. 


is  allowed  on  the  cost  of  the  municipal  plants,  and  7.5  per 
cent  for  depreciation,  taxes  lost,  and  other  items,  the 
average  charge  for  street  lighting  in  every  group  of  private 
plants  is  higher  than  the  cost  in  the  corresponding  groups 
of  public  plants.* 

Three  very  definite  criticisms  can  be  made  of  Professor 
Bemis's  results.  In  the  first  place,  he  uses  a  simple  arith- 
metical average  instead  of  a  weighted  average,  a  fact 
which  makes  many  of  his  figures  misleading.  Furthermore, 
there  is  no  opportunity  to  verify  the  returns  upon  which 
his  computations  are  based;  we  are  given  only  the  most 
meager  data,  with  no  local  background  whatever.  But, 
most  significant  of  all,  when  a  public  plant  has  begun  to  be 
operated  in  connection  with  a  water-works  system  or  some 
other  municipal  enterprise,  he  charges  against  the  street 
lighting  merely  the  "added"  costs,  thus  letting  another 
department  bear  most  of  the  lighting  burden. «  In  view  of 
this  fact,  if  for  no  other  reason,  his  figures  are  practically 
worthless  for  comparative  purposes,  for  at  that  time  con- 
siderably more  than  half  the  municipal  plants  were  "com- 
posite," 3  and  one  of  the  chief  reasons  for  establishing  them 
was  the  claim  that  they  could  thus  be  operated  at  a  very 
low  cost. 

Professor  Perrine  points  out  the  futility  of  all  of  these 
investigations  which  are  concerned  primarily  with  com- 
paring the  financial  cost  of  lightmg  under  the  two  forms 
of  management.  Such  methods  do  not  reach  the  funda- 
mental considerations;  our  studies  must  go  beyond  the 
tax  rate.  Plants  without  similar  load  factors  cannot  be 
compared.  As  he  has  contributed  something  new  to  the 
discussion,  it  is  interesting  to  note  his  exact  words:  — 

^  The  true  basis  of  comparison  and  the  true  conclusion  in  study- 
ing the  problem  of  electrical  supply  is  not  therefore  to  be  found 
in  the  cost  to  the  municipality  for  a  certam  portion  of  that  serv- 
ice,  but  rather  m  the  expenditure  of  human  energy  for  perf orm- 

^  Mun.  Monop.:  U(Ht6l,   ^    *  Ibid.:  936.        »  Central,  1902:26-26. 


84 


MUNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


25 


If  I 


ing  the  whole  service.  That  electrical  plant  is  of  the  greatest 
service  to  the  whole  community  which  supplies  a  given  amount 
of  electrical  energy  with  the  smallest  amount  of  plant,  the  low- 
est consumption  of  coal,  water,  and  supplies  of  every  kind,  in 
which  the  simplest  management  can  be  obtained  and  the  smallest 
number  of  men  employed  for  the  least  time  in  the  management, 
m  keeping  accounts,  in  operating  machinery,  and  in  performing 
repairs.  So  stated,  the  problem  becomes  one  of  the  science  of 
engineering,  rather  than  of  the  science  of  economics.* 

In  1900  the  much-heralded  Fourteenth  Annual  Report 
of  the  United  States  Conunissioner  of  Labor  appeared.  A 
large  part  of  the  Report  is  devoted  to  an  exhaustive  com- 
pilation of  all  available  data  regarding  municipal  and  pri- 
vate electric  lighting  in  the  United  States,  ^  collected  mostly 
in  the  year  1898  by  help  of  oflBcials  of  the  State  Bureaus  of 
Labor  Stetistics,  special  agents,  and  carefully  prepared 
schedules.  As  returns  were  secured  from  only  320  of  the 
460  known  public  plants  and  from  only  632  of  the  2,572 
private  plants,'  the  survey  cannot  be  considered  very  com- 
plete. Feeling  on  the  question  ran  high  at  the  time.  Muni- 
cipal bookkeeping  was  in  a  bad  state,  and  private  business 
did  not  relish  being  investigated.  In  the  words  of  the 
Commissioner:  "Private  concerns  were  more  able  but  less 
willing,  and  municipal  establishments  more  willing  but 
less  able,  to  furnish  the  facts  required."  * 

For  purposes  of  comparison  the  plants  are  grouped 
according  to  the  horse  power  of  their  engines,  and  not  by 
locality  or  population.  No  names  of  plants  or  even  of 
States  are  given.  In  order  to  secure  a  fairer  basis  of  com- 
parison, taxes  lost,  interest  on  total  investment,  deprecia- 
tion (estimated  usuaUy  at  5  per  cent,  excluding  land), 
rentals,  insurance,  water  used,  free  service,  and  other 
items  frequently  overlooked,  but  nevertheless  forming  a 

»  Mun.  Monop.:  28»-289.  Cf.  Mun.  Aff.^  i:  605-680,  an  article  in 
which  B.  R.  Bowker.  of  the  New  York  Edison  Company,  points  out  the 
fallacies  and  extremes  of  most  comparisons  (see  p.  624). 

*  U.S.  Labor,  xiv:  535-975.  »  Ibid.:  12.  *  Ibid.:  6. 


part  of  the  true  costs  of  mum'cipal  plants,  are  computed. 
These  data,  however,  are  not  combined  with  the  usual 
operating  expenses  when  comparisons  of  the  cost  of  street 
lighting  are  made.i  The  student  is  left  to  draw  his  own 
conclusions  and  add  whatever  items  he  thinks  should  be 
considered. 

Some  attention  is  given  to  various  operating  expenses, 
though  no  very  marked  conclusions  are  drawn.  No  attempt 
IS  made  definitely  to  compare  the  rates  for  commercial 
lightmg  in  the  two  classes,  partially  on  account  of  the  fact 
that  so  much  of  the  business  was  done  on  a  contract  basis 
and  the  hours  of  service  were  not  known.  2  But  it  is  dis- 
tinctly stated  that  m  many  cases  the  reason  for  a  seeming 
lower  cost  of  street  Ughting  in  pubKc  plants  was  due  to  the 
fact  that  the  prices  charged  to  consumers  were  sufficiently 
high  to  reduce  the  cost  of  their  own  Hghting.^  So  far  as 
the  comparative  cost  of  street  lighting  is  concerned,  the 
Bureau  finds  that  in  practicaUy  all  cases  the  cost  under 
municipal  ownership  is  less.   But,  when  the  above-men- 
tioned  "additional  items"  clearly  entering  into  the  cost 
are  included,  the  writer  finds  that  the  supposed  advan- 
tages disappear,  the  municipal  plants  in  general  secure 
their  light  for  no  less  than  do  those  buying  from  private 
concerns,  and  very  frequently  pay  a  good  deal  more,  par- 
ticularly for  incandescent  street  lightmg. 

This  extensive  and  impartial  investigation  marks  a  dis- 
tinct advance.  Yet  the  findings  are  far  from  satisfactory. 
The  only  averages  worked  out  were  for  salaries  and  wages, 
and  the  prices  charged  for  fight.  No  true  averages  of  c^sti 
were  found,  but  only  arithmetical  averages  of  averages. 
The  kilowatt-hour  prices  are  almost  wholly  estimates,  as 
there  was  fittle  metered  service  at  the  time.  The  grouping 
according  to  horse  power  of  engines,  with  no  knowledge  of 
load  factor  or  local  conditions,  is  of  little  service.   And, 

*  U.S.  Labor,  xiv:  17-18,  54S-546,  75&-764. 

*  Ibid.:  19.  »/Wd.;54a-549. 


26 


MUNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


27 


finally,  it  is  probable  that  the  third  of  the  municipal  plants 
which  did  not  report  were,  under  the  circumstances,  those 
whose  financial  condition  was  the  least  satisfactory. 

While  the  National  Government  had  been  investigating 
this  question,  a  number  of  State  Bureaus  of  Labor  and 
Industrial  Statistics  were  also  compiling  more  or  less  com- 
plete data  for  their  own  reports.    Of  these  surveys,  the 
work  of  the  Michigan  and  New  York  Bureaus  is  the  most 
important,  though  deserving  no  more  than  a  passing  no- 
tice.^ Of  various  articles  upon  the  subject  appearing  within 
the  next  few  years,  mention  should  be  made  particularly 
of  those  pubUshed  in  "Municipal  Affairs,"  among  which 
that  by  Victor  Rosewater,  on  "The  Case  for  Municipal 
Electric  Lighting,"  *  is  probably  of  most  significance.  He 
recognizes  clearly  the  diflSculties  of  any  acciu-ate  statis- 
tical comparisons  with  the  data  at  that  time  available. 
Different  rate  schedules,  different  length  of  contracts  and 
franchises,  differences  in  line  construction  (whether  over- 
head or  underground),  and  the  widely  diverse  rates  of 
depreciation  in  different  localities,  would  of  themselves  be 
sufl&cient  wholly  to  invalidate  such  comparisons  as  were 
attempted  by  the  Census  Bureau.^ 

Owing  to  the  fact  that  Massachusetts  was  the  only 
State  dming  this  period  which  prescribed  uniform  account- 
ing and  which  kept  even  approximately  accurate  records 
of  municipal  electric  lighting,  it  seems  strange  that  so 
little  attempt  was  made  to  study  the  subject  intensively 
in  this  State.  The  reason  for  this  may  be  that  definite 
figures  would  tend  to  rob  the  discussion  of  a  goodly  share 
of  the  interest  which  is  always  bestowed  upon  uncertain- 
ties. However,  Alton  D.  Adams,  a  man  of  some  engineer- 
ing training,  appeared  before  the  United  States  Industrial 

»  Conn.,  Labor,  xv:  20-41;  Kan.,  Labor,  xra:  91-98;  Mich.,  Labor, 
XV :  186-188  and  194-197;  Neb.,  Labor,  vi:  566-572;  N.Y.,  Labor,  xv: 
499-565. 

«  Mun.  Aff.,  VI :  622-635.  »  Ibid. :  625-627. 


Commission  in  1900,  and  presented  the  brief  results  of 
some  of  his  studies  of  municipal  electric  lighting  in  Massa- 
chusetts.^ He  selected  17  private  plants,  in  places  compar- 
able in  size,  to  contrast  with  14  public  plants  making  their 
current.  By  adding  to  the  commercial  income  of  the  muni- 
cipal plants  the  income  from  all  public  lighting,  estimated 
at  the  rates  charged  for  such  service  by  the  private  plants 
studied,  he  finds  that  after  paying  for  all  operating  ex- 
penses the  net  income  on  their  investment  is  12.3  per  cent, 
while  that  of  the  companies  is  only  10.2  per  cent.  This  he 
seems  to  think  indicative  of  greater  asperating  eflSciency 
under  public  ownership.  Yet  this  comparison  is  suflficiently 
absurd  when  we  consider  that  this  so-called  "net  income** 
may  mean  much  or  nothing  in  proportion  as  the  invest- 
ment per  plant  and  the  corresponding  fixed  charges  are 
great  or  small.  He  admits  that  he  knows  nothing  about 
the  local  conditions;*  he  has  no  data  on  the  character  of 
the  load;  he  makes  no  attempt  to  compare  operating  ratios; 
nor  does  he  take  into  account  the  taxes  lost  by  municipali- 
ties, as  well  as  other  items  which  a  study  of  the  returns  fw 
that  period,  1899,  leads  us  to  believe  should  be  charged 
against  many  of  the  municipal  plants. 

He  then  endeavors  to  compute  the  cost  of  street  lighting 
to  towns  owning  their  plants,  by  adding  to  the  operating 
deficit  for  the  year  interest  on  the  total  investment  at  the 
rate  paid  on  the  outstanding  bonds  plus  the  legal  rate  of 
depreciation,  5  per  cent,  and  charging  the  total  to  the 
street  lighting  account.  Making  no  allowance  for  taxes 
lost,  he  finds  that  the  lamp-hour  cost  is  in  some  cases 
higher  and  in  some  cases  lower  than  is  charged  by  the 
companies  studied.  Though  Adams  is  reluctant  to  give 
averages,  the  writer  finds  from  his  figures  that  for  arc  fights 
the  cost  per  lamp  hour  is  almost  identical  for  the  two 
groups,  while  for  incandescents  it  is  sHghtly  higher  for  the 
municipal  plants.  He  made  no  exact  computation  of  the 


»  U.S.  Ind.  Com.,  ix:  275-285. 


s  /&td.:280. 


28  MUNICIPAL  ELECTRIC  LIGHTING 

commercial  charges,  but  thinks  them  about  the  same  for 
the  two  groups  of  plants.  ^  His  studies  constitute  one  more 
futile  attempt  to  throw  light  upon  a  highly  complicated 
problem  by  a  superficial  analysis  of  income  and  expense 

accoimts.* 

The   Census  Report  on  Central  Electric  Light  and 
Power  Stations  for  1902,  pubUshed  in  1905,  was  the  first 
really  comprehensive  and  systematic  collection  of  material 
on  the  subject.  Not  only  were  the  financial  features  cov- 
ered, but  also  data  were  given  for  the  physical  equipment, 
output,  employees  and  wages,  history,  general  develop- 
ment, and  franchises.    Central  stations  were  classified 
according  to  their  ownership,  and  grouped  by  States,  and 
in  some  instences  by  population  and  dynamo  capacity. 
For  certain  purposes  purely  electric  and  composite  stations 
were  differentiated.    It  appeared  that,  contrary  to  the 
general  opmion,  all  but  77  of  the  municipal  plants,  consid- 
erably less  than  10  per  cent,  were  doing  a  commercial  as 
well  as  a  street-lighting  business.*    While  many  general 
comparisons  of  pubUc  and  private  plants  are  made,  with 
a  view  to  indicating  their  relative  importance,  there  is  no 
attempt  to  draw  conclusions.  No  theories  are  developed, 
and  frequently  the  facts  are  inadequately  explained.  Much 
rather  necessary  detail  regarding  expenses  is  omitted. 
Naturally  no  load  factors  are  given.   The  output  of  cur- 
rent is  merely  estimated,  and  not  a  guess  is  hazarded  as 
to  the  amount  of  current  unaccounted  for  in  the  various 
kinds  of  plants.   Furthermore,  owing  to  the  lack  of  any- 
thing approaching  a  uniform  system  of  accounting  in  cen- 
tral electric  stations,  much  of  the  material  collected  b 
beyond  a  doubt  hopelessly  inaccurate.   Yet  this  Report, 

>  U.S.  Ind.  Com.,  ix :  282. 

«  Adams  has  written  a  number  of  interesting  articles  on  the  subject 
of  municipal  electric  lighting  m  Massachusetts.  Cf.  Mun.  Eng.,  xxiii: 
160-164;  and  particularly  Mun.  Eng.,  xxv:  282-240;  also  references  in 

next  chapter. 

»  Central,  1902:12. 


IN  MASSACHUSETTS 


99 


together  with  the  two  later  ones  for  1907  and  1912,  fur- 
nishes  a  rich  mine  of  information  for  the  student. 

The  1907  Report  of  the  National  Civic  Federation,  on 
Municipal  and  Private  Operation  of  PubHc  Utilities,  is 
the  most  painstaking  attempt  thus  far  made  to  find  out 
whether  public  industries,  judged  from  every  point  of 
view,  are  really  holding  their  own  with  private  enterprise, 
both  in  the  United  States  and  in  Great  Britain.  After  two 
fuU  years  of  work,  the  Committee  of  weU-known  men, 
constantly  assisted  by  experts,  found  out  —  nothing.  To 
use  their  own  words: 

The  Committee  takes  no  position  on  the  question  of  the  general 
expediency  of  either  private  or  pubHc  ownership.  The  question 
must  be  solved  by  each  municipality  in  the  light  of  local  condi- 
tions.  What  may  be  possible  in  one  locality  may  not  be  in  an- 
other.* 

For  the  study  of  municipal  electric  lighting  in  this  coun- 
try,  two  methods  were  followed.   In  the  first  place,  four 
representative  public  plants  were  chosen.  South  Norwalk 
(Connecticut),  Chicago,  Detroit,  and  Allegheny,  of  which 
the  first  alone  did  a  commercial  business,  and  four  private 
plants,  Chicago,  Pittsburgh,  Geneva  (New  York),  and  To- 
ledo, which,  it  was  agreed,  were  operated  under  approxi- 
mately similar  conditions.    Each  was  studied  intensively 
from  many  points  of  view  by  committees  composed  of  both 
the  friends  and  foes  of  municipalization.  In  addition  to  the 
cleverly  devised  schedules,  2  covering  much  space  and  con- 
veying Httle  usable  information,  many  reports  of  experts 
were  submitted.^  But,  as  might  have  been  predicted,  no 
significant  conclusions  were  reached.  Our  old  friends  Bemis 
and  Parsons  are  as  enthusiastic  on  the  subject  as  in  the 
earHer  days,  though  their  exuberance  is  more  restrained. 

1  N.  C.  F.,  1 :  26.  «  Ibid.,  11 :  665-908. 

»  Cf.  md  :  863-884;  a  carefully  worked-out  "Report  on  the  Financial 
^^^'fnVT.  *^^  Municipal  Electric  Lighting  Plant,"  by  Marwick 
MitcheU  &  Co.,  in  which  it  appears  that  the  cost  per  arc  in  1894  was 
$194,  somewhat  higher  than  Parsons'*  estimate  (supra,  p.  18)  of  $96 ! 


80 


MUNICIPAL  ELECTRIC  LIGHTING 


H 


On  the  other  hand,  Charles  L.  Edgar,  President  of  the 
Boston  Edison  Company,  and  Walton  Clark,  of  the  cele- 
brated United  Gas  Improvement  Company,  of  Philadel- 
phia, make  out  a  very  strong  case  for  private  business. 
Their  conflicting  views  can  best  be  expressed  in  their  own 
words:  — 

It  appears  to  the  writer  to  be  conclusively  demonstrated  from 
the  ab»ove  facts  that  in  both  water,  gas,  and  electricity  the  mu- 
nicipal plants  have  done  far  better  for  the  taxpayer  and  con- 
sumer than  the  private  plants  in  anything  like  a  similar  situation.^ 

We  believe  no  intelligent  reader  of  the  voluminous  record  of 
this  Commission's  work  will  fail  to  conclude  that  it  clearly  proves 
municipal  ownership  to  be  productive  of  many  and  serious  ills, 
with  little  or  no  compensating  good.^ 

The  second  method  followed  was  to  select  eight  public 
plants  to  compare  with  an  equal  number  of  similarly  situ- 
ated private  plants  in  Massachusetts.  The  result  of  this 
well-planned  investigation  consisted  of  three  hundred 
pages  of  hopeless  junk.'  Not  a  single  attempt  was  made 
to  interpret  the  material  laboriously  collected  by  Alton  D. 
Adams  and  Charles  E.  Prichard,  of  the  Beverly,  Massa- 
chusetts, Gas  Light  Company.  And,  less  strange  than  it 
may  seem  to  the  casual  student,  in  many  instances  ex- 
actly opposite  answers  regarding  even  simple  matters  of 
fact,  wCTe  given  by  these  two  men  whose  views  on  the  sub- 
ject of  public  ownership  were  different.  Why  the  Com- 
mittee should  have  devoted  all  of  its  attention  to  the  first 
investigation,  which  could  lead  nowhere,  and  should  have 
completely  ignored  the  second,  which  alone  could  have  led 
to  definite  conclusions,  remains  a  mystery.* 

Practically  the  only  conclusions  to  be  drawn  from  this 
pretentious  compilation  of  the  National  Civic  Federation, 
so  far  as  our  particular  subject  is  concerned,  are:  (a)  that 

*  N.  C.  F.,  1 :  184;  signed  by  Bemis  and  Parsons. 

*  Ibid.,  441 ;  signed  by  Edgar  and  Clark.  »  Ibid.,  u :  909-1213. 

*  Cf.  Central,  1902: 85.  One  member  of  the  Committee  has  explained 
to  the  writer  that  both  "funds  and  time"  were  lacking. 


IN  MASSACHUSETTS  si 

the  enormous  number  of  considerations  and  qualifications 
which  enter  into  the  problem  of  comparing  the  two  kinds 
of  business  make  the  task  of  drawing  general  conclusions 
well-nigh  impossible;  (b)  without  the  proper  interpreta- 
tion, a  great  mass  of  comparable  data  is  in  danger  of  be- 
fogging the  fundamental  issues;  and  finally,  (c)  no  investi- 
gation carried  on  by  prejudiced  individuals  wiU  lead  to 
satisfactory  results,  for  even  though  the  two  extremes  are 
averaged,  the  resulting  mean  is  not  necessarily  the  truth. 

Since  this  date  interest  in  the  purely  financial  aspects 
of  the  problem  of  municipal  electric  lighting  seems  some- 
what to  have  waned,  except  for  propagandist  purposes. 
More  attention  has  been  given  to  other  phases  of  the 
question.  1  The  general  "ignorance  and  inefficiency"  of 
municipal  management  has  been  stressed  by  many,  2  while 
others  have  laid  emphasis  upon  quality  and  service  rather 
than  rates.8  Some  point  with  glowing  pride  to  what  they 
a,re  pleased  to  term  the  "remarkable  success"  of  such  pub- 
lic plants  as  those  of  Cleveland,  Detroit,  and  Pasadena, 
while  others  are  astounded  at  their  "colossal  failure,"  and 
greatly  deplore  the  "crookedness"  of  their  records.  South 
Norwalk  has  been  particularly  in  the  limeKght.* 

Current  literature  is  full  of  superficial  discussions  of  the 
subject.  For  a  presentation  of  both  sides  of  the  contro- 
versy, one  can  turn  to  many  numbers  of  the  Annals  of  the 
American  Academy  of  Political  and  Social  Science^  as 
weU  as  to  the  Proceedmgs  and  pubhcations  of  the  National 
Municipal  League.  For  data  with  which  to  refute  (?)  the 
municipalizers,  one  need  but  look  through  the  files  of 
"Concerning  Municipal  Ownership,"  and  "Public  Serv- 

»  urn.  Mag.,  I,  6: 1.  «  Cf.  Hohnes:  284-287 

»  Cf.  Pahner,  in^.  A.  A.,  Lvn:3»^;  and  Lareon.  in  Jour.  Am, 
Waterworks  Assn.,  i:m:51&-537. 

*  For  opposing  views  on  the  South  Norwalk  case  see  T.  C.  Martin  in 
Kept,  of  Com.  on  Prog.  N.  E.  L.  A.,  1914 :  45^7;  and  Albert  E.  Winches- 
ter, supermtendent  of  the  plant,  m  A.  A.  A.,  lvh:  228-245. 

*  Cf.  A.  A.  A.,  xxvn,  uu,  and  lvii,  passim. 


MUNICIPAL  ELECTRIC  LIGHTING 


ice."  Arguments  and  facts  on  the  public  side  can  be 
found  in  the  earlier  numbers  of  the  "Arena,"  in  the  more 
recently  published  "UtiKties  Magazine,"  and  in  the 
"Municipal  Journal."  The  latter  is  particularly  active  in 
trying  to  show  the  economic  waste  of  private  owTiership, 
proving  conclusively  in  two  pages  of  a  recent  number  that 
municipal  plants  in  Massachusetts  are  superior  to  the 
company  plants  in  every  wayl^  Finally,  the  more  tech- 
nical publications,  the  electrical  and  engineering  maga- 
zines, generally  support  the  side  of  private  enterprise,  on 
scientific  grounds.  ^ 

There  is  also  a  large  amount  of  miscellaneous  material 
upon  the  subject.  Some  interesting  comparative  data 
have  been  collected  by  the  special  committees  of  investi- 
gation appointed  by  various  municipalities  considering  the 
expediency  of  operating  their  own  lighting  systems.  Of 
these  mention  should  be  made  of  the  reports  of  Wellesley, 
Massachusetts  (1900),  Binghampton  (1905)  and  Syracuse, 
New  York  (1907),  South  Hadley,  Massachusetts  (1913), 
and  Geneseo,  Illinois  (191  ?).  A  series  of  eleven  pamphlets 
entitled  "Complete  Reports  on  Municipally  Owned  Utility 
Plants  in  the  State  of  Ohio,"  in  which  it  was  attempted  to 
show  that  practically  all  of  the  78  public  electric  stations 
studied  are  financial  failures,  was  published  in  1914-15  by 
the  Pubhc  Service  Publishing  Company  of  Chicago.  The 
same  concern  issues  a  list  of  municipal  plants  sold  or 
abandoned,  the  1915  edition  being  entitled  "Facts  on  Mu- 
nicipal Ownership  in  268  Towns  and  Cities."  A  similar 
list  of  "  Defunct  Municipal  Lighting  Plants,"  with  a  good 
deal  of  historical  detail,  is  put  out  by  the  Municipal  Own- 
ership Publishing  Company  of  New  York.  Neither  list  is 
wholly  trustworthy. 

»  Mun.  Jour.,  xl:  266-268;  cf.  also  thid.,  xxxin:  685-696;  xxxv:  171- 
186;  and  xxxvii :  264-272  and  274-278. 

*  Cf.  in  particular  various  numbers  of  the  Etedrical  World  and  the 
Electrical  Engineer. 


m  MASSACHUSETTS 


33 


More  dependable  in  their  facts  and  more  scientific  iq 
their  methods  are  some  of  the  monographs  which  have 
recently  appeared.  A  1915  bulletm  of  the  Iowa  State  Col- 
lege of  Agriculture  and  Mechanic  Arts,  entitled  "Electric 
Central  Station  Operation  in  Iowa,"  presents  some  inter- 
esting studies  bearing  directly  on  the  subject,  in  which 
10  public  stations  are  contrasted  with  46  privately  owned.^ 
Mr.  Harold  V.  Bozell's  "Data  on  Municipal  Plant  Opera- 
tion in  Oklahoma"  (1916),  seems  to  show  that  £6  of  the 
larger  water  and  light  plants  of  the  State  are  running  be- 
hind financially,  when  all  legitimate  expenses  are  charged 
against  them,  and  that  the  municipal  bookkeeping  is  in  a 
sorry  state.*  A  third  brief  investigation,  very  well  done, 
is  that  of  Mr.  A.  G.  Christie,  on  the  "Municipally  Operated 
Electrical  Utilities  of  Western  Canada,"  presented  at  the 
Convention  of  the  American  Institute  of  Electrical  Engi- 
neers in  1916.  Nine  public  plants  are  carefully  studied 
from  many  points  of  view,  and  some  statistical  compari- 
sons are  made  with  a  group  of  19  Massachusetts  plants.'  * 

Finally,  as  general  aids  in  investigation,  in  addition  to 
the  quinquennial  Reports  of  the  Census  Bureau  on  Cen- 
tral Electric  Light  and  Power  Stations,  the  Annual  Reports 
of  the  Massachusetts  Board  of  Gas  and  Electric  Light 

»  Iowa,  EL  Cent. :  99-104.      «  Bozell :  7-15.      »  Christie :  308-309, 325. 

*  Just  as  this  book  is  going  to  press  the  writer  has  discovered  one  more 
attempted  contribution  to  the  field  of  mmiicipal  electric  lighting,  in  the 
form  of  a  little  book  by  Carl  D.  Thompson,  entitled  Municipal  Electric 
Ligld  and  Power  PlanU  in  the  United  States  and  Canada,  gotten  out  under 
the  auspices  of  the  Municipal  Ownership  League  of  America. 

In  this  book  are  collected  a  number  of  interesting  facts,  practically  all 
of  which  are  out  of  date.  The  substance  of  most  of  the  superficial  studies 
already  referred  to  m  the  present  chapter,  has  been  incorporated  in  Mr. 
Thompson's  book  as  sound  doctrine.  There  is  some  detailed  account 
of  a  few  of  the  more  successful  publicly  owned  plants,  while  others  are 
touched  but  lightly.  It  is  a  frankly  propagandist  piece  of  work,  and 
barely  skims  the  surface  of  the  problem.  Yet  it  is  referred  to  by  a  recent 
reviewer  as  "apart  from  the  Census  Reports  the  most  complete  and  ex- 
haustive survey  of  publicly  owned  electric  generating  plants  ever  made 
in  this  country"!  (Quoted  from  Evans  Clark  in  Util.  Mag.,  February. 
1918.  p.  14.) 


M 


MUNICIPAL  ELECTRIC  LIGHTING 


I" 


f\ 


Commissioners,  of  the  Wisconsin  Railroad  Commission 
(Part  in),  and  of  the  New  York  Public  Service  Commission 
of  the  Second  District  (vol.  ni),  are  particularly  helpful. 
For  a  comparative  study  of  the  legal  aspects  of  the  problem 
of  municipal  electric  lighting,  the  1913  Report  of  the  Na- 
tional Civic  Federation  on  the  "Commission  Regulation 
of  Public  Utilities,"  an  analysis  of  the  laws  of  43  States, 
is  useful.  Mention  should  also  be  made  of  "Public  Utility 
Reports  Annotated,"  a  bi-monthly  publication;  "Rate 
Research,"  published  weekly  by  the  National  Electric 
Light  Association;  and  "Public  Service  Regulation  and 
Federal  Trade  Reporter,"  issued  monthly.  Much  useful 
financial  and  physical  data  on  individual  plants  can  be 
secured  from  the  "McGraw  Central  Station  List,"  ap- 
pearing biennially,  as  well  as  from  the  "Public  UtiUt/ 
Sections"  of  Poor's  and  Moody's  "Manuals."  The  two 
latter,  however,  include  only  private  plants. 

In  conclusion,  while  it  was  long  ago  admitted  that  infer- 
ences drawn  from  foreign  experience  in  municipalization 
will  not  apply  in  this  country,  ^  yet  in  view  of  the  fact  that 
Great  Britain  has  more  public  than  private  electric  light- 
ing plants  (325  vs.  269  in  1916),  some  reference  should  be 
made  to  the  best  sources  for  the  study  of  this  problem  in 
that  country.  Among  these  may  be  noted  the  "Returns 
to  the  Local  Government  Board,  of  Reproductive  Under- 
takings Carried  on  by  Municipal  Boroughs,"  the  "Munic- 
ipal Year  Book,"  Garcke's  "Manual  of  Electrical  Under- 
takings" (an  annual  publication,  of  which  volumes  vii  and 
X  contain  particularly  useful  data),  and  the  "Electrical 
Times  Table  of  Electric  Supply  Costs  and  Records." 

As  municipal  plants  in  Great  Britain  operate  under 
practically  the  same  conditions  as  private  plants,  it  should 
be  easier  to  make  comparisons  there  than  here.  Yet  rather 
diverse  conclusions  have  been  reached  by  investigators. 
Of  American  students  of  the  question,  Everett  W.  Bur- 

*  L.  S.  Rowe,  Am.  Jour.  Soc.,  xii :  241-253. 


IN  MASSACHUSETTS 


SB 

dett «  and  Robert  P.  Porter  ^  have  attempted  to  make  out 
a  strong  case  for  the  opposition,  not  merely  on  the  grounds 
that  the  tax  rate  ha.  been  increased,  aJthey  aC  Tn 
spite  of  the  fact  that  the  "profits"  made  in  tL  buSeS 
are  supposed  to  help  relieve  the  "rates,"  but  also  on  the 
general  grounds  that  the  extension  of  service  and  develop! 
ment  have  been  retarded  by  public  ownership,  and  that 
the  pohtica  effects  are  bad.  Even  Frederic  C.  Howe  who 
ert:LS-'  r?^'^^'^^-'  -^-ts  that  mu^il 

£  R  M  UK?  ^"  ^'^  ^^  '^^^^^  «"^^««  i«  England.' 
Milo  R  MaJtbie,  m  the  National  Civic  Federation  ^port 

^decidedly  cautious  in  his  conclusions.^  Among  SS^h 
^iters  on  the  subject,  the  views  of  Major  Da'rwin  td 
L^  Avebury  on  the  one  hand  and  of  Bernard  Shaw  and 
Emil  Davies  on  the  other,  are  too  well  known  to  need 

Tubir'-  ^^^ -^  -^^-  -  aware,  no  cl^mpiontf 
public  ownership  m  England  ha.  reaUy  made  a  scientific 

3  : 1  ^'"'^  1  ''^  ^^-^--%hting  problem,  and 
unfortunately  most  of  the  opponents  have  approa^rhed  the 
problem  with  a  prejudiced  mind.s  <^nea  me 

^d  Methods  of  Mu^^eipal  T^din^' t'^  "bSy  d^n" S 
most  scientific  work.   IncidentaUy  he  discuss^,  in  .„  .j    •    u! 
way  some  of  the  problems  of  electoic  U^ZT 
^  Jour.  Pol.  Econ.,  xiv:313.  ~~"  " ~ 

»  W  "'  Tf  V"'^^^^"^'  "Strangling  the  Electrical  Industry  » 

llS.^Tf"       ^^''  ^""-  ^^''  ^^^'   Cf-  ^«  Howe,  5r^  C^^ill- 
118;  and,  for  opposite  conclusions,  Meyer-  chs  xn-^vrrr  iT*  -' 

ly.y.  r.,i.  5WO-261 ;  and  m :  248-382. 

It  IS  unnecessary  to  refer  to  Germany  in  this  connection     T}..r» 

While  m  attempting  comparisons  the  poHtiS  svs^^anH  f^  ^-  i 
traits  of  Germany  must  be  fuUy  weiXd    ?i!  n  J^^  "^^^^'^^ 

and  Brooks,  in  Q  J  E  ^  IsTiS  f^  ^.^!^««°- 216,  226-229; 
ElectricWorks  »  Al^^f  ^"  ^^~^^^'  «°  Municipalization  of  Berlin 
rdectric  Works.     Also  cf.  various  numbers  of  the  ^ommwrw/e* /oAriticA) 


4 


CHAPTER  n 

THE  MASSACHUSETTS  LAWS  AND  THE  WORK  OF  THE 
MASSACHUSETTS  BOARD  OF  GAS  AND  ELECTRIC  LIGHT 
COMMISSIONERS 

From  the  preceding  criticisms  it  should  be  sufficiently 
evident  that,  aside  from  the  personal  prejudices,  the  un- 
scientific methods,  or  the  superficial  interpretations  which 
have  in  some  measure  characterized  practically  all  studies 
of  the  subject,  one  of  the  chief  difficulties  confronting 
every  student  of  the  problem  of  municipal  electric  lighting 
in  the  United  States  has  been  the  hopeless  lack  of  compar- 
able data.  Too  much  guessing  has  been  necessary.  As 
previously  suggested,  Massachusetts  is  the  only  State 
which  for  a  long  period  of  time  has  even  attempted  to  keep 
definite  records  of  both  municipal  and  private  electric 
lighting.^  Hence  the  writer  has  chos^i  this  State  for  the 
purpose  of  his  investigation.  But  before  explaining  the 
specific  methods  of  treatment  that  are  to  be  followed,  it 
will  be  well  to  review  briefly  the  main  provisions  of  the 
Massachusetts  laws,  in  so  far  as  they  relate  to  the  problem 
under  consideration.  ^  Some  mention  will  also  be  made 
of  the  accomplishments  of  the  Board  of  Gas  and  Electric 
Light  Commissioners  in  their  execution  and  interpretation 
of  the  Law. 

1.  The  Massachusetts  Laws  Relating  to  the  Electric 
Light  and  Power  Business 

The  Massachusetts  Board  of  Gas  Commissioners,  com- 
posed of  three  members,  appointed  one  each  year  by  the 

1  Of.  Central,  1902:  85,  and  Gray,  in  Q.  J.  E.,  xv:  270-271. 

*  Most  references  are  made  to  the  laws  as  compiled  in  1914  by  the 
Board  of  Gas  and  Electric  Light  Commissioners,  "General  Laws  Relating 
to  the  Manufacture  and  Sale  of  Gas  and  Electricity,"  Chapter  742  of 
the  Acte  of  1914,  and  to  the  laws  as  published  from  year  to  year  in  the 
Reports  of  the  Board. 


MUNICIPAL  ELECTRIC  LIGHTING 


37 


I';     I 


Governor  for  a  term  of  three  years,  was  created  in  1885.* 
The  act  provided  for  a  general  supervision  of  the  accounts 
of  gas  companies,^  for  regulation  of  the  quality  and  price 
of  gas  upon  complaint,'  and  for  some  restriction  of  com- 
petition.* The  annual  expenses  of  the  Commissioners 
were  to  be  assessed  upon  the  several  companies  in  pro- 
portion to  their  gross  earnings.*  The  Attorney-General 
was  empowered  to  deal  with  companies  violating  the  law 
or  failing  to  comply  with  the  orders  of  the  Board.'  By 
an  act  of  the  next  year  a  system  of  uniform  accounts  was 
prescribed,^  and  the  Board  was  given  authority,  upon 
petition,  to  compel  the  supply  of  gas  under  "legal  and 
reasonable  "  conditions.*  No  bonds  were  to  be  issued  for  less 
than  the  par  value  nor  in  excess  of  the  paid-up  capital.* 
In  1887  the  Board  was  made  a  "Board  of  Gas  and  Electric 
Light  Commissioners,"*^  and  practically  all  laws  appli- 
cable to  gas  companies  were  extended  so  as  to  include  all 
companies  and  individuals  engaged  in  the  electric  Ughting 
business.  It  was  further  made  possible  for  gas  companies, 
upon  application  to  the  Board,  to  engage  in  the  manufao 
ture  and  sale  of  electric  current  for  Ught  and  power." 

In  1888  the  town  of  Danvers  constructed  an  electric 
plant  for  the  purpose  of  Hghting  its  streets."  The  follow- 
ing year  the  Danvers  Gas  Light  Company  petitioned  to  be 
allowed  to  manufacture  and  sell  electric  Hght  to  the  people 
of  the  community.  Whereupon  the  town,  supported  by  an 
almost  unanimous  vote  of  the  citizens,  asked  the  Legisla- 
ture to  grant  them  the  privilege  of  doing  a  commercial 

»  Mass.,  1885,  ch.  314.      «  Ibid,,  sect,  7. 

•  Ibid.,  sect.  9.  *  Ibid.,  sects.  10, 16. 

•  Ibid.,  sect.  6.  But  of.  Mass.  1917,  ch.  205,  sect.  3,  which  provides  that 
municipal  plants  also  shall  share  the  expenses  in  proportion  to  their  ovm 
annual  expenses. 

•  Ibid.,  sect.  12. 

'  Mass.,  1886,  ch.  346,  sects.  1,  2;  also  Mass.  G.  &  E.,  m:  126-132: 
and  IV :  176-186. 

«  Ibid.,  sect.  5.  »  lUd.,  sect.  3. 

"  Mass..  1887.  ch.  382.     "  Ibid.,  ch.  385.      w  Mass.  G.  &  £..  v:  SOi. 


if 


S8 


MUNICIPAL  ELECTRIC  LIGHTING 


i 


lighting  business.  The  request  was  not  at  this  time  granted, 
but  finally,  in  1891,  an  act  was  passed  "to  legalize  the  ac- 
tion of  the  town  of  Danvers  in  establishing  an  electric  light 
plant,  and  to  authorize  said  town  to  generate  and  distrib- 
ute electric  Hght  and  power."  ^ 

The  Danvers  case  was  the  beginnmg  of  a  long  discussion 
regarding  the  propriety  of  municipahties'  engaging  in  a 
street  and  commercial  lighting  business,  which  culminated 
in  the  passing  of  the  famous  "Municipal  Ownership  Act" 
of  1891.  Among  other  provisions,  cities  and  towns  were 
given  the  right  to  construct  their  own  plants  or  were  re- 
quired to  purchase  ah^ady  existing  plants.  2  A  uniform 
system  of  accounting  was  prescribed,  similar  to  that  im- 
posed upon  the  companies,^  and  all  the  general  laws  re- 
lating to  the  manufacture  and  sale  of  electricity  were 
extended  to  municipalities  whenever  applicable.*  Though 
this  act  was  somewhat  modified  in  1893,^  no  radical  changes 
in  any  of  the  laws  have  been  made  since  that  time.  Ac- 
cordingly it  will  be  suflScient  for  our  purposes  to  call  atten- 
tion to  the  main  features  of  the  laws  regarding  electric 
lighting  as  they  stand  at  present. 

A  town  or  city  may  "construct,  purchase,  or  lease"  an 
electric  plant  for  the  manufacture  or  distribution  of  elec- 
tricity, either  for  its  own  use  or  for  the  use  of  its  inhabit- 
ants (qualified  until  1917  by  the  clause,  "except  for  the 
operation  of  electric  cars  ") .«  Nothing  in  this  section  of  the 
law,  however,  prevents  a  municipality  from  extending  its 
service  to  another  town  which  is  not  already  supplied  with 
electric  light,^  though  a  special  act  of  the  Legislature  must 

»  Mass.,  1891,  ch.  378,  Special  Laws.       «  Ibid.,  ch.  370.  secte.  1, 12-14. 
»  Ibid.,  ch.  379,  sect.  9;  also  Mass.  G.  &  E.,  vm:  263-285. 

*  Ibid.,  sect.  17.  8  Mass.,  1893,  ch.  454. 

•  Mass.,  1914,  ch.  732,  sect.  92.  This  portion  of  the  law  was  repealed 
by  Mass.,  1917,  ch.  205,  sect.  2. 

^  Cf.  Mass.,  1915,  ch.  191;  also  the  following  Special  Acts:  Mass.. 
1898,  ch.  143;  1901,  ch.  97;  1904,  ch.  324;  1908,  ch.  369;  1910,  ch.  581; 
1911,  ch.  108;  1914,  ch.  737;  and  1915,  ch.  140. 


IN  MASSACHUSETTS  m 

precede  such  extension,  or  from  selling  in  bulk  to  a  private 
company  or  to  another  municipal  plant.  In  order  to  acquire 
its  plant,  a  city  must  be  so  authorized  by  a  two  thirds  vote 
of  each  branch  of  its  council,  or  by  a  majority  vote  of 
whatever  sort  of  governing  body  it  chances  to  have,  passed 
in  each  of  two  successive  municipal  years,  and  ratified  by  a 
majority  of  the  voters  at  an  annual  or  special  election.^ 
A  tovm  must  be  authorized  by  a  two  thirds  majority  of  the 
voters  at  each  of  two  town  meetings  specially  called  and 
"held  at  intervals  of  not  less  than  two  nor  more  than  thir- 
teen months."  2  If  the  vote  of  a  city  is  not  ratified,  no  sim- 
ilar vote  can  be  submitted  for  a  period  of  one  year,  and  if 
one  or  both  votes  of  a  tottm  are  unfavorable,  no  similar 
vote  can  be  passed  within  a  period  of  two  years  thereafter. 
Also,  provision  is  made  for  a  speedy  certification  of  all 
votes  to  the  Board.^  Finally,  by  a  law  recently  enacted, 
it  is  provided  that  a  town  or  city  having  once  acquired 
a  lighting  plant  shall  not  sell  the  same  unless  such   sale 
shall  have  been  authorized  by  votes  in  the  same  manner 
as  required  for  the  original  acquisition  of  the  plant.  * 

If,  when  the  first  vote  is  passed,  there  is  a  private  plant 
ah-eady  operating  in  the  city  or  town,  and  the  owners  of 
the  same  shall  elect  to  sell,  the  municipality  shall  be  re- 
quired to  buy.5  Moreover,  if  a  private  gas  and  electric 
plant  in  the  said  place  be  operated  under  a  single  control, 
the  purchase  shall  include  both.  If  the  central  station  be 
located  outside  the  city  or  town,  the  purchase  shall  mclude 
only  those  portions  of  the  system  within  the  municipal 
limits,  and  the  city  or  town  shall  be  allowed  to  buy  its 
current  from  another  municipaUty  or  from  a  private  plant,^ 
or,  with  certain  restrictions,  from  a  street  railway  company.^ 

*  Mass.,  1914,  ch.  742,  sects.  95-97.  «  Ibid.,  sect.  94. 

»  Ibid. :  sects.  95-97.  When  "Board'*  is  used,  it  will  be  understood  to 
mean  "Board  of  Gas  and  Electric  Light  Commissioners  " 

*  Mass.,  1917,  ch.  205,  sect.  1. 

»  Mass.,  1914.  ch.  742.  sect.  100.  «  Ibid.,  sects.  108-111. 

'  Ibid.   While  public  plants,  as  the  law  originally  stood,  were  not 


10 


MUNICIPAL  ELECTRIC  LIGHTING 


M 


Furthermore,  the  municipality  may,  if  it  so  chooses,  pur- 
chase additional  property  of  the  private  plant  situated 
in  an  adjoining  city  or  town  where  there  is  no  private 
lighting  plant  established,  and  may  thereafter  supply  cur- 
rent to  the  said  municipality  or  to  the  inhabitants  thereof, 
subject  to  "the  same  limitations  and  obligations"  as  if  it 
were  a  private  business.* 

The  purchase  price  of  such  plant  as  defined  by  the  stat- 
ute is  to  be  "its  fair  market  value  for  the  purposes  of  its 
use,  taking  into  account  any  depreciation  or  obsolescence 
thereof  or  of  any  part  thereof."  But  **no  portion  of  such 
plant  shall  be  estimated  at  less  than  its  fair  market  value 
for  any  other  purpose,  including,  as  an  element  of  value, 
the  damages,  if  any,  caused  by  the  severance  of  any  portion 
of  such  plant  lying  outside  such  city  or  town  limits,  if  they 
[sic]  are  not  purchased  by  the  city  or  town,  and  excluding 
any  mortgage  or  other  encumbrance  or  lien  to  which  such 
plant  or  any  part  thereof  may  be  subject  at  the  time  of 
said  purchase."  Furthermore,  "such  value  shall  be  esti- 
mated without  enhancement  on  account  of  future  earning 
capacity,  or  good  will,  or  of  exclusive  privileges  derived 
from  rights  in  the  public  streets."  And,  finally,  "no  city 
or  town  shall  be  required  to  buy  any  property  unnecessarily 
added  to  a  plant  after  the  passage  of  its  first  vote,  .  .  .  nor 
any  property  except  such  as  would  be  suitable  for  the 
ordinary  business  of  the  vendor."  2 

If  the  city  or  town  do  not  agree  with  the  owner  as  to  the 
price  or  the  property  to  be  conveyed,  it  may,  within  a 
specified  time,  apply  to  the  Supreme  Judicial  Court  of  the 

allowed  to  sell  current  to  the  street  railways,  for  fear  of  some  sinister 
influence,  they  have  always  been  permitted  to  purchase  from  them  at 
rates  approved  by  the  Bosu^. 

»  Mass.,  1914,  ch.  742,  sects.  103,  104,  106. 

*  Ibid.,  sect.  100.  The  present  earning  capacity  of  the  plant  was  in- 
cluded as  an  element  of  value  in  the  original  Act  of  1891,  ch.  370,  sect. 
12.  Two  years  later  this  was  omitted  by  section  5  of  chapter  454  of  the 
Acts  of  1893. 


IN  MASSACHUSETTS 


41 


county,  which  shall  refer  the  application  to  the  Board  of 
Gas  and  Electric  Light  Commissioners.  The  Board,  in 
turn,  shall  review  the  entire  case,  and  their  decision  as  to 
the  value  or  amount  of  the  property  to  be  conveyed,  when 
accepted  by  the  court,  shall  be  final.*  If  any  expenses  of 
litigation  are  incurred  under  this  section,  "they  may  be 
reckoned  as  part  of  the  indebtedness  for  which  bonds  may 
be  issued"  by  the  municipality. 

Subject  to  a  two  thirds  vote  of  the  voters  present  in 
case  of  a  town  or  a  "two  thirds  vote  of  all  the  members  of 
a  city  council  or  other  governing  body,"  a  municipality 
may  contract  debt  outside  the  statutory  debt  limit,  but 
payable  within  a  period  of  twenty  years,  for  the  purpose  of 
"establishing,  purchasing,  extending  or  enlarging  a  gas  or 
electric  light  plant  within  its  limits."  *  The  indebtedness 
so  incurred,  however,  shall  not  exceed  in  towns  five  per 
cent  and  in  cities  two  and  one  half  per  cent  "of  the  last 
preceding  assessed  valuation."  Bonds,  notes,  or  certifi- 
cates of  indebtedness  may  be  issued  for  the  above  purposes,' 
but  all  future  bond  issues  after  1913  are  to  be  on  a  serial 
and  not  a  sinking  fund  basis.*  Since  1905  it  has  been  un- 
lawful for  municipalities  to  borrow  in  order  to  meet  any 
of  the  annual  expenses  of  their  plants.'  • 

»  Mass.,  1914,  ch.  742,  sect.  101.  Before  this  date  (1914)  special  com- 
missioners appointed  by  the  court  arbitrated  the  case  instead  of  the  Board. 
Cf.  Mass.,  1891.  ch.  370,  sect.  13  and  1905,  ch.  401.  sect.  1. 

*  Mass..  1913.  ch.  719.  sects.  6,  12.  The  statutory  debt  limit  is  for  a 
city  two  and  one  half  per  cent  of  the  average  valuation  of  estates  for 
the  three  preceding  years,  and  for  a  town  three  per  cent,  with  a  few  quali- 
fications. 

"  Mass..  1914,  ch.  742.  sect.  98. 

*  Mass.,  1913,  ch.  719.  sects.  13-15.  Prior  to  this  time  both  forms  of 
issue  were  conunon.  Cf.  Mass..  1891,  ch.  370.  sect.  4,  in  which  the  issue 
of  30  years  bond  bearing  not  more  than  5  pet  cent  mterest  was  stiou- 
lated. 

»  Cf.  Mass.,  1891,  ch.  370,  sect.  4,  1905.  ch.  410,  sect.  4,  and  1914,  ch. 
742,  sect.  114. 

*  All  notes  are  to  be  certified  by  the  Director  of  the  Bureau  of  Statis- 
tics. Cf.  Mass.,  1910,  ch.  616,  sect.  2. 


42 


MUNICIPAL  ELECTRIC  LIGHTING 


A  ioion  undertaking  the  gas  or  electric-lighting  business 
may  elect  a  municipal  light  board  consisting  of  three  mem- 
bers, chosen  one  each  year  for  a  period  of  three  years. ^  A 
"manager  of  municipal  lighting,"  to  be  appointed  by  the 
mayor  of  a  city  or  the  selectmen,  or  municipal  light  board, 
if  any,  of  a  town,  at  a  salary  and  for  a  term  of  office  to  be 
fixed  by  those  appointing  him,^  and  under  their  "direction 
and  control,"  shall  have  "full  charge  of  the  operation  and 
management  of  the  plant,  the  manufacture  and  distribu- 
tion of  gas  or  electricity,  the  purchase  of  supplies,  the 
employment  of  agents  and  servants,  the  method,  time, 
price,  quantity  and  quality  of  the  supply,  the  collection 
of  bills,  and  the  keeping  of  accounts."  He  shall,  before 
entering  upon  his  office,  give  satisfactory  bond.  All  money 
shall  be  turned  over  to  the  town  or  city  treasurer,  and  all 
bills  shall  be  paid  by  the  treasurer  at  the  order  of  the  man- 
ager. Finally,  he  shall  render  to  the  Board  of  Gas  and 
Electric  Light  Commissioners,  and  to  the  mayor,  select- 
men, or  municipal  light  board,  if  any,  such  reports  as  they 
may  from  time  to  time  require.^ 

Before  the  beginning  of  each  fiscal  year  the  manager  is 
required  to  submit  to  the  mayor,  selectmen,  or  municipal 
light  board,  an  estimate  of  the  income  from  sales  to  private 
consumers  during  the  following  year  and  of  the  total  ex- 
penses of  the  plant  for  the  same  period.*  The  statute  de- 
fines "expenses"  as  the  "gross  expenses  of  operation,  main- 
tenance and  repair,  the  interest  on  the  bonds,  notes,  or 
certificates  of  indebtedness  issued  to  pay  for  the  plant,  an 
amount  for  depreciation  equal  to  three  per  cent  of  the  cost 
of  the  plant  exclusive  of  land  and  any  water  power  appur- 
tenant thereto,  or  such  smaller  or  larger  amount  as  the 
Board  of  Gas  and  Electric  Light  Conmiissioners  may  ap- 

»  Mass.,  1914,  ch.  742,  sect.  112.  Cf.  also  p.  S^,  infra. 

*  The  term  of  oflBce  has  usually  been  one  year,  though  re-elections  are 
common.  See  ch.  xm,  infra. 

»  Mass..  1914,  ch.  742.  sect.  113. 

*  Ibid.,  sect.  114;  cf.  also  Mass..  1913,  ch.  692,  sect.  1. 


IN  MASSACHUSETTS 


43 


prove,  the  requirements  of  the  sinking  fund  or  debt  in- 
curred for  the  plant,  and  the  loss,  if  any,  in  the  operation 
of  the  plant  during  the  preceding  year."  The  excess  of 
such  "expense"  over  the  estimated  commercial  income, 
is  to  be  included  in  the  "annual  appropriations  for  main- 
tenance and  in  the  tax  levy."  The  "cost"  of  the  plant, 
for  this  purpose,  is  the  "total  amount  expended  on  the 
plant  to  the  beginning  of  the  fiscal  year  for  any  purpose 
for  which  bonds,  notes,  or  certificates  of  indebtedness  may 
be  issued."  "Loss  in  operation"  simply  means  the  differ- 
ence between  the  amount  received  from  private  customers 
plus  the  sum  appropriated  for  maintenance  during  the 
preceding  year,  and  the  total  expenses  as  above  defined. 

Depreciation  was  not  included  as  an  item  in  the  annual 
expenses  until  1905,  though  from  1891  it  had  been  reck- 
oned at  five  per  cent  as  part  of  the  cost  of  producing  cur- 
rent.^ In  this  year  an  amount  equal  to  five  per  cent  of  the 
total  cost  of  the  plant,  or  more  or  less  as  the  Board  might 
approve,  was  to  be  included  as  part  of  the  expense  and  to 
be  provided  for,  if  necessary,  in  the  annual  appropriations 
for  maintenance  or  from  the  tax  levy.^  No  part  of  the  sum 
allowed  for  depreciation  was  to  be  spent  for  any  purpose 
other  than  "renewals,  in  excess  of  ordinary  repairs,  exten- 
sions, reconstruction,  enlargements,  and  additions."  The 
act  further  provides  that  any  surplus  left,  after  the  above 
payments  are  made,  "shall  be  kept  as  a  separate  fimd  and 
used  for  renewals,  other  than  ordinary  repairs,  extensions, 
reconstruction,  enlargements,  and  additions  in  succeeding 
years,"  and  that  "no  debt  shall  be  incurred  for  any  exten- 
sion, reconstruction,  or  enlargements  of  the  plant  in  excess 
of  the  amount  needed  for  the  purpose  in  addition  to  the 
amount  then  on  hand  in  said  depreciation  fund."  The  fund 
is  to  be  kept  by  the  city  or  town  treasurer  as  a  separate 

fimd. 

In  the  following  year,  after  the  Board  had  refused  to 

»  Mass..  1891,  ch.  370,  sect.  10  «  Mass.,  1905,  ch.  410.  sect.  4. 


iN 


44 


JilUNICrPAL  ELECTRIC  LIGHTING 


allow  the  city  of  Holyoke  to  make  an  allowance  for  depre- 
ciation of  less  than  five  per  cent,*  the  law  was  amended  so 
as  to  make  the  required  depreciation  allowance  "three  per 
cent  of  the  cost  of  the  plant,  excltisive  of  land  and  any  water 
power  appurtenant  thereto''^  Finally,  in  1908,  in  addition 
to  the  above  uses  of  the  fund,  it  was  provided  that  such 
portion  as  the  Board  may  approve  "may  be  used  to  pay 
notes,  bonds,  or  scrip  issued  to  pay  for  the  cost  of  recon- 
struction or  renewals  in  excess  of  ordinary  repairs."'  Since 
this  date  there  has  been  no  change  in  the  law  regarding 
depreciation. 

Private  plants,  it  should  be  noted,  have  never  been  re- 
quired to  write  off  depreciation.  This  difference  in  require- 
ments is  probably  accounted  for  by  the  following  reasons. 
In  the  first  place,  there  has  been  a  general  feeling,  largely 
justified  by  facts,  that  municipal  plants,  subjected  to  con- 
stant public  pressure  for  low  rates,  without  regard  to  the 
future,  and  with  the  tax  levy  to  fall  back  upon  in  case  of 
need,  should  be  carefully  safeguarded  by  law  in  this  impor- 
tant matter,  even  though  the  rate  of  depreciation  fixed  may 
at  times  be  wholly  arbitrary.  On  the  other  hand,  since  the 
law  gives  a  highly  effective  regulatory  power  to  the  Board, 
which  can  thoroughly  review  the  methods  of  private  finan- 
cing whenever  a  rate  case  or  a  petition  for  new  stock  or 
bond  issues  comes  up,  it  is  supposed  that  self-interest  will 
restrain  the  companies  from  declaring  dividends  out  of 
capital  and  so  impairing  their  resources,  particularly  in 
view  of  the  fact  that  it  would  be  practically  impossible  to 
capitalize  losses  incurred  in  this  manner.  (See  ch.  vni, 
infra.) 

When  a  municipality  fixes  or  changes  the  price  of  gas  or 
electricity,  which  change  shall  not  be  oftener  than  once 
in  three  months,*  and  shall  take  effect  on  the  first  day  of 
a  month,  the  manager  shall  at  once  notify  the  Board  of 


1  Mass.  G.  &  E.,  XXI :  45-49. 
s  Mass.,  1908.  cb.  486. 


*  Mass.,  1906,  ch.  411. 

«  Mass.,  1914,  cb.  742.  sect.  llfi. 


I 


IN  MASSACHUSETTS 


#5 


Gas  and  Electric  Light  Commissioners,  failing  to  do  which 
he  shaQ  forfeit  not  more  than  twenty-five  dollars.^  The 
price  shall  not  be  fixed  at  less  than  cost  except  with  the 
written  consent  of  the  Board.  In  "cost"  shall  be  included 
"all  operating  expenses,  interest  on  the  investment  in  the 
plant,  less  assessments  (for  extensions),  at  the  rate  paid 
upon  the  bonds  and  serial  notes,  ...  the  requirements  of 
the  serial  debt  or  the  sinking  fund,  .  .  .  and  also  deprecia- 
tion of  the  plant  to  be  reckoned  at  not  less  than  three  per 
cent  per  annum  of  its  cost,  and  losses."  *  Above  cost  as 
thus  computed  the  municipality  shall  not  be  allowed  to 
charge  such  a  price  as  will  yield  a  profit  of  more  than  eight 
per  cent  upon  its  investment,  but  gas  or  electricity  used  by 
a  city  or  town  "  shall  be  charged  to  it  at  cost."  The  enforce- 
ment of  these  provisions  rests  with  the  Supreme  Judicial 
Court  of  the  county,  which  may,  upon  the  petition  of  the 
Board  or  of  twenty  taxpayers,  compel  prices  to  be  fixed  by 
the  municipality  in  accordance  with  the  rules  laid  down.' 
As  to  the  price  charged  by  the  companies,  that  is  subject 
to  the  review  of  the  Board.  If  the  mayor  of  a  city  or  the 
selectmen  of  a  town,  or  twenty  customers,  submit  a  com- 
plaint in  writing  to  the  Board  regarding  the  price  or  qual- 
ity of  gas  or  electricity  sold,  the  latter  shall,  after  formal 
notice,  give  a  public  hearing  to  both  the  petitioners  and 
the  company,  alter  which  it  may  order  a  reduction  in  price 
or  an  improvement  in  quality,  and  may  fix  a  maximum 
rate.*  Such  action  is  subject  to  future  revision  by  the 
Board.^  Differential  rates  are  neither  authorized  nor  pro- 
hibited for  municipalities  or  for  private  companies,®  while 
the  principle  of  a  minimum  monthly  charge,  though  not 
directly  covered  by  any  law,  is  recognized  and  endorsed 
by  the  Board.' 

1  Mass.,  1914,  ch.  742.  sect.  116.  *  Ihid.,  sect.  115. 

«  /6m/.,  sect.  125.  *  lUd.,  sect.  162.  *  Ibid.,  sect.  163. 

«  Ibid.,  sects.  190,  198.   Cf.  also  Mass.  G.  &  E.,  xxviii :  27. 
^  Mass.  G.  &  E.,  XXV :  37-42.  The  practice  be^an  as  a  meter  rental 
charge. 


46 


MUNICIPAL  ELECTRIC  LIGHTING 


A  municipal  plant  may  require  an  advance  deposit  from 
customers  suflBcient  to  pay  for  three  months'  use  of  gas  or 
electricity,  and  is  allowed  to  shut  off  the  supply  when  pay- 
ment is  in  arrears.^  Similar  provisions  apply  to  the  com- 
panies.2  In  the  matter  of  compulsory  supply,  however, 
the  law  is  different  in  the  two  cases.  No  city  or  town  shall 
be  compelled  to  furnish  gas  or  electricity  "except  upon  the 
order  of  the  Board."  '  Moreover,  a  municipahty  owning 
its  plant  is  permitted  to  assess  upon  "the  owner  or  occu- 
pant of  any  premises"  part  or  all  of  the  cost  of  "laying  and 
maintaining  pipes,  conduits,  conductors,  or  other  appli- 
ances thereon."  ^  While  payment  of  such  assessments  is 
not  compulsory,  it  is  a  "condition  precedent  to  the  supply- 
ing of  gas  or  electricity  to  the  occupants  of  such  premises."  * 
A  company,  on  the  other  hand,  upon  a  written  petition 
from  an  aggrieved  party  to  the  Board,  followed  by  a 
hearing,  can  be  compelled  "to  supply  the  petitioner  with 
gas  or  electricity,  upon  such  terms  and  conditions  as  are 
legal  and  reasonable."  * 

Both  municipal  and  private  plants  are  required  to  keep 
their  books  and  accounts  in  the  form  prescribed  by  the 
Board,^  and  to  hold  them,  together  with  all  papers,  at  all 
times  open  to  the  inspection  of  the  Board  or  of  its  duly 
authorized  agents.®  Annual  retiums  in  a  uniformly  pre- 
scribed form  are  to  be  made  to  the  Board  by  both  groups 
of  plants  on  or  before  the  second  Wednesday  in  September, 
for  the  year  ending  on  June  30th.'  These  returns,  practi- 
caUy  the  same  in  both  cases,  are,  for  companies,  to  state, 
among  other  things,  the  amount  of  authorized  capital,  the 
indebtedness  and  financial  condition,  the  dividends  paid 

1  Mass.,  1914,  ch.  742,  sect.  115.  «  lUd.,  sects.  63,  194. 

»  lUd.,  sect.  117.  <  Ibid.,  sect.  118. 

*  Ihld.   One  of  the  Commissioners  states  that  there  has  never  been  a 
petition  for  extension  under  this  law. 

•  Ibid.,  sect.  161.  Such  petitions  and  orders  have  been  very  frequent. 
^  Ibid.,  sects.  120,  144,  145. 

8  Ibid.,  sect.  120.  143.  •  Ibid.,  sects.  120, 146. 


IN  MASSACHUSETTS 


47 


or  declared,  a  list  of  the  salaried  oflScers  with  their  salaries, 
the  income  and  expenses  of  the  preceding  year,  and  the 
balance  sheet  of  their  accounts.^  With  respect  to  the 
records  to  be  kept  and  the  annual  returns  to  be  made,  no 
active  legal  compulsion  is  exercised  over  municipal  plants. ^ 
In  the  case  of  the  companies,  however,  a  very  considerable 
fine  is  imposed  for  late  returns  or  for  failure  to  make  re- 
turns, as  well  as  a  heavy  penalty  for  false  reports.'  The 
law  also  grants  the  Board  almost  equally  strict  supervision 
over  the  books  of  voluntary  associations.* 

In  addition  to  the  foregoing  laws  a  city  or  town  owning 
its  plant  is  subject  to  the  general  laws  relating  to  the  "  man- 
ufacture, use,  or  distribution  of  gas  or  electricity,  in  so  far 
as  they  may  be  appHcable,"  ^  as  well  as  to  the  laws  pecu- 
liarly applicable  to  public  employees,  regarding  hours  of 
labor,  vacations,  pensions,  etc.*  Mention  should  be  made, 
however,  of  a  few  additional  laws  which  particularly  affect 
companies  and  which  deal  for  the  most  part  with  ques- 
tions of  franchise,  competition  and  combination,  and 
capitalization. 

Practically  all  electric  light  and  power  companies  are 
now  organized  under  the  general  law  of  the  State,^  in 
accordance  with  which  three  or  more  persons  may  associate 
for  the  purpose  of  forming  a  gas  or  electric  company.*  The 
certificate  of  organization  must  be  submitted  to  the  Com- 
missioner of  Corporations,  who,  if  he  finds  that  the  law 
has  been  complied  with,  shall  signify  his  approval  by  his 
endorsement  thereon  and  shall  file  it  with  the  Secretary  of 
State,  who,  in  tium,  shall  issue  a  charter  ^  which  is  subject 

1  Mass.,  1914,  ch.  742,  sect.  146. 

'  lbid.y  sect.  120.  In  1915,  30  per  cent  of  the  public  plants  made  late 
returns,  and  very  few  made  correct  returns. 

'  Ibid.,  sects.  147,  149.  In  1915  about  five  per  cent  of  the  companies 
made  late  returns.  With  few  exceptions,  their  returns  needed  no  corrections. 

<  Ibid.,  sects.  148,  150-153.  «*  Ibid.,  sect.  123. 

•  Mass.,  1911,  ch.  494;  1912,  ch.  503;  1914,  ch.  217;  1914,  ch.  688. 

"*  Mass.  G.  &  E.,  XXIV :  ccxcvii. 

«  Mass.,  1914,  ch.  742,  sect.  3.  •  Ibid.,  sect.  10. 


I i 


!l 


! 


MUNICIPAL  ELECTBIC  LIGHTING 

to  amendment,  alteration,  or  repeal  by  the  General  Court.* 
Nor  can  the  company  begin  doing  business  until  all  of  its 
capital  stock,  or  such  part  as  may  have  been  approved  by 
the  Board  of  Gas  and  Electric  Light  Commissioners,  is 
paid  in.^  And,  finally,  it  is  necessary  to  secure  from  the 
mayor  and  aldermen  of  a  city,  or  the  selectmen  of  a  town, 
permission  to  use  the  pubUc  ways  for  the  location  of  lines 
and  other  appliances,^  which  permission  they  may  after 
notice  and  a  hearing,  grant,  subject  to  the  conditions  which 
they  may  see  fit  to  impose.  Though  there  seems  to  be  no 
specific  law  on  the  matter,  it  is  generally  understood  that 
franchises  are  "indeterminate  and  revocable."  ^ 

The  law  seems  to  encourage  both  horizontal  combina- 
tions and  integration  in  the  industry.  With  the  approval 
of  the  Board,  a  company  may  extend  its  business  into  an 
adjoining  city  or  town."  Also,  after  a  two  thirds  vote  of 
the  stock,  an  electric  company  may,  if  the  Board  deem  it 
consistent  with  the  public  interest,  purchase  the  property 
of  another  company  situated  in  the  same  or  contiguous 
municipalities,  or  of  a  gas  and  electric  company  of  which 
the  gross  receipts  from  the  sale  of  electricity  during  the 
preceding  year  were  at  least  three  times  the  receipts  from 
the  sale  of  gas,  or  may  consolidate  with  such  company.® 
Additional  provision  is  made  for  the  consolidation  of  elec- 
tric and  hydro-electric  companies,  under  certain  condi- 
tions.'^  But  the  aggregate  amoimt  of  capital  stock  and  of 
the  debts  shall  not  by  such  consolidation  or  purchase  be 
increased.*  Furthermore,  the  entry  of  a  second  electric 
company  into  a  city  or  town  is  prohibited,  except  upon 
the  consent  of  the  mayor  and  aldermen  or  selectmen, 
granted  after  a  pubhc  hearing.®    Any  party  aggrieved  by 

1  Mass.,  1914,  ch.  742,  sect.  12.  «  Ibid.,  sect.  48. 

*  Ibid.,  sect.  127;  1911,  ch.  509,  sect.  2;  cf.  also  1908,  ch.  617,  sect.  1. 

*  Cf.  Mass.  G.  &  E.,  xxvii:  50,  and  321a;  Mass.,  1914,  ch.  741,  sect. 
124. 

«  Mass.,  1914,  ch.  742,  sect.  61.  «  Ibid.,  sect.  165. 

»  Ibid.,  sect.  16G.  »  Ibid.,  sect.  168.  •  Ibid.,  sect.  156. 


IN  MASSACHUSETTS 


49 


such  decision  may  appeal  within  thirty  days  to  the  Board, 
which,  after  a  hearing,  shall  render  the  final  decision.  ^ 

In  view  of  this  fostering  of  monopoly  in  the  electric- 
lighting  business,  the  State  has  considered  it  highly  neces- 
sary to  prevent  any  form  of  stock  watering.  Hence,  in 
addition  to  the  provisions  already  mentioned,  stock  divi- 
dends are  prohibited,*  and  impaired  capital  is  to  be  made 
good  when  such  impairment  is  discovered  by  the  Board.* 
Companies  can  issue  only  such  amount  of  stock  and  bond 
as  the  Board  may  approve  as  "reasonably  necessary"  for 
the  purpose  for  which  they  are  authorized.*  New  shares 
are  to  be  issued  at  not  less  than  par,  at  a  price  to  be  fixed 
by  the  directors,  unless  the  Board  considers  such  price  too 
low,  in  which  case  the  latter  may  determine  the  price.* 
Nor  shall  the  bonded  indebtedness  exceed  the  capital 
actually  paid  in.'  Finally,  holding  companies  are  done 
away  with  by  the  law  of  1913  which  forbids  one  corpora- 
tion to  hold  more  than  ten  per  cent  of  the  stock  of  a  gas  or 
electric  light,  heat,  or  power  company.' 

2.  The  Work  op  the  Massachusetts  Board  op  Gas  and 
Electric  Light  Commissioners 

Massachusetts  led  the  other  States  by  about  twenty 
years  in  commission  regulation  of  private  and  municipal 
electric  lighting.^  There  were  no  precedents  to  follow.* 
Experience  and  the  judgment  of  the  Commissioners  them- 
selves have  helped  to  make  the  law  from  year  to  year.  The 
authority  lodged  in  the  hands  of  these  three  men  has  been 
gradually  increased,  and  only  once  (the  Fall  River  case) 

*  Mass.»  1914,  ch.  742,  sect.  157. 

2  Ibid.,  sects.  36-37.  '  Ibid.,  sect.  40.         *  Ibid.,  sect.  39. 

6  Ibid.,  sect.  43.  «  Ibid.,  sect.  38.  »  Mass.,  1913,  ch.  597. 

*  No  other  commissions  for  the  regulation  of  electric  lighting  compan- 
ies were  created  before  1907,  and  only  five  before  1910.  Since  that  date 
about  twenty  more  have  been  established.  Not  half  of  these  have  juris- 
diction over  municipal  lighting. 

«  Mass.  G.  &£.,  i:6. 


80 


MUNICIPAL  ELECTRIC  LIGHTING 


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51 


,!(( 


i 


has  the  action  of  the  Board  been  reviewed  or  reversed  by 
the  suj)erior  court.  ^  It  has  constantly  been  a  moulder  of 
public  opinion  with  respect  to  public  utilities,  not  only 
in  the  State,  but  throughout  the  Nation. 

In  dealing  with  the  problem  of  municipal  ownership  the 
Board  has,  with  few  exceptions,  been  untiring  in  its  in- 
sistence that  public  business  should  conform  to  the  best 
practice  of  private  business.  The  task  has  been  enormous. 
It  was  many  years  before  any  satisfactory  accounts  could 
be  secured  from  municipal  managers.  2  Constant  visiting, 
advice,  and  correspondence  have  been  and  still  are  neces- 
sary.   Much  expert  assistance  is  rendered  from  time  to 
time.   In  the  face  of  numerous  petitions  for  the  lowering 
of  rates,  the  Board  has  sometimes  abided  by  the  letter  of 
the  law,  refusing  to  let  current  be  sold  for  less  than  cost 
as  defined  by  the  statute.   It  has  always  maintained  that 
taxpayers  should  not  be  burdened  for  the  benefit  of  private 
consumers.  Yet,  when  there  seemed  a  good  prospect  of  de- 
veloping business  thereby,  it  has  not  hesitated  to  use  its 
discretionary  power  by  granting  provisionally  a  rate  lower 
than  cost.3  At  all  times  the  aim  has  been,  not  merely  to 
insist  upon  the  principles  of  sound  public  finance,  but  also 
to  inculcate  high  civic  ideals.   Whatever  may  have  been 
the  purpose  of  the  framers  of  the  law,  and  it  seems  to  have 
been  rather  hostile  to  public  ownership,  the  outcome  has 
been  that,  due  to  the  very  restrictions  of  the  law  and  due 
still  more  to  the  fostering  care  of  the  Board,  the  experi- 
ment of  municipalization  has  been  carried  out  imder  more 
favorable  conditions  in  Massachusetts  than  in  any  other 

*  For  an  interesting  case  see  Mass.  G.  &  E.  xxix:  12-13,  and  386a- 
395a;  cf.  Mass.,  1915,  ch.  21,  which  extends  the  supervision  of  the  Board 
to  water  companies.  Cf.  also  Mass.,  1908,  ch.  617;  1914,  ch.  742,  sects. 
1  and  166;  1916,  ch.  64,  —  whereby  the  authority  of  the  Board  has  been 
extended  to  purely  power  companies  as  weD  as  to  hydro-electric  com- 
panies. 

«  Mass.  G.  &E.,  xra:54. 

»  See  Mass.  G.  &  E..  x:  33-34; xiv:  10-13;  xv:  13, 14;  and  xxx:  95, 96. 
104-108,  110-119. 


state  in  the  Union,  and,  perhaps,  than  in  any  other 
place  that  we  know  about,  not  excepting  England  or 

Germany. 

As  the  law  for  companies  has  been  more  complicated 
and  less  specific  than  that  for  the  public  plants,  the  Board 
has  by  its  decisions  and  recommendations  influenced  legis- 
lation and  established  important  precedents.  If  the  original 
purpose  of  the  law  was  to  restrain  competition  and  foster 
monopoly,*  it  is  certainly  true  that  the  Commissioners, 
while  abiding  by  the  formal  letter,  have  infused  into  it  the 
real  spu-it  which  should  pervade  all  pubUc  utiUty  laws  — 
strict  regvlatian  for  the  highest  good  of  all.  At  an  early  date 
the  Board  called  attention  to  the  evils  which  might  result 
from  competition  due  to  failures  or  future  consolidations, 
as  well  as  to  the  annoyances  which  would  arise  from  imdue 
interference  with  the  public  highways.  ^  The  policy  has 
been  never  to  admit  a  competing  company  unless  it  should 
have  been  clearly  demonstrated  that  it  would  in  the  long 
run  render  better  and  cheaper  service  than  the  existing 
company.'  Very  frequently  it  has  been  necessary  to  re- 
verse permissions  granted  by  municipahties,  even  after 
contracts  have  been  entered  into.*  Private  individuals 
have  usually  been  restrained  from  erecting  their  wires 
in  the  public  streets.^  The  Board  has  always  favored  one 
large  plant  on  the  ground  of  eJ05ciency  and  economy,  rather 
than  several  small  ones,*  and  has  by  its  decisions  encoiu*- 
aged  the  large  companies  to  generate  the  current  for  the 
smaller  ones  as  well  as  for  both  private  and  public  consum- 
ers in  other  localities.^    This  policy,  combined  with  con- 

1  Gray.  Q. /.£:.,  XV :  254. 

«  Mass.  G.  &  E.,  v:  3,  4,  93-98. 

»  Ibid.,  xm:  11;  xix:  22-25;  xxra:  28.  *  Ibid.,  v:  104-108. 

•*  Ibid.,  v:  97,  98,  and  xxvn:  32-39.  •  Ibid.,  xxiv:  ccdi. 

^  Ibid.,  XXVII :  316a.  A  recent  order  of  the  Board  (1918)  is  meant  to 
encourage  consolidation  of  resources  during  the  war,  with  a  view  p>ar- 
ticularly  to  economy  in  generation  of  current.  This  order,  with  some 
amplifications,  has  just  been  enacted  into  law  by  ch^ter  152  of  the 
General  Acts  of  1918. 


m 


MUNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


&$ 


\\ 


slant  regulation  of  rates,  has  served  to  keep  those  in  the 
business  always  on  the  alert. 

In  public  service  regulation  control  of  capitalization 
and  rate-making  are  different  aspects  of  the  same  problem. 
When  the  question  of  the  reasonableness  of  rates  arises, 
the  Board  usually  reviews  the  financial  history  of  a  com- 
pany before  making  its  decision.  As  a  result  of  many  years 
of  supervision  of  stock  and  bond  issues,  it  considers  a 
physical  valuation  of  the  plants  in  the  State  unnecessary. ' 
In  fact,  no  definite  theory  of  valuation  has  ever  been  laid 
down,  but  every  effort  has  been  made  to  keep  the  "fair 
structural  value"  of  the  plant  equal  to  the  outstanding 
stock  and  bonds.  ^  While  many  years  ago  it  was  suggested 
that  a  natural  increase  in  the  value  of  real  estate  might  in 
some  cases  offset  the  failure  to  charge  off  depreciation,' 
the  Board  is  in  general  opposed  to  allowing  a  return  on  the 
unearned  increment  of  land.*  "Woridng  capital"  is  rarely 
mentioned,  intangibles  are  not  allowed  in  the  valuation, 
and  the  capitalization  of  high  earnings  against  the  public 
is  vigorously  opposed.*  The  legal  restrictions  placed  upon 
the  issue  of  new  capital  have  led  to  the  policy,  on  the  part 
of  the  companies,  of  creating  a  large  proportion  of  floating 
indebtedness,  most  of  which  at  present  probably  repre- 
sents lawful  expenditures  for  extensions,  improvements, 
and  new  plant,  but  some  of  which  has  been  occasioned  by 
past  losses  in  operation.  This  issue  of  notes  undoubtedly 
comphcates  the  work  of  the  Commissioners,  yet  they  have 
always  stood  for  the  principle  that  depreciation  of  all  kinds 
should  be  paid  out  of  earnings  and  that  losses  cannot  be 
capitalized.^ 

»  Mass.  G.  &  E.,  XXIX :  874a. 

*  Ibid.,  xxrv :  43;  also  Mass.,  1896,  ch.  473,  and  1914,  ch.  742,  sect  40. 
»  Ibid.,  i:  6.  «  /6irf.,xxix:20. 

»  Ibid.,  IX :  8,  and  xxix:  12,  13,  386a-895a. 

•  Ibid.,  x:  41-45,  and  xv:  21-26.  On  February  21,  1917,  the  Board, 
after  the  Edison  Electric  lUuminatmg  Company  of  Boston,  failing  to 
secure  their  approval  of  a  new  stock  issue,  had  issued  five-year  coupon 


Though  at  an  early  date  the  Board  realized  that  capital 
must  be  encouraged  in  order  to  develop  the  electric  light 
and  power  business  to  its  greatest  efficiency,*  yet  by  reason 
of  the  comparative  regularity  of  returns  which  might  result 
from  practical  monopoly,  it  maintained  that  profits  could 
not  reasonably  be  expected  to  be  so  high  as  in  more  venture- 
some undertakings.*  In  the  Springfield  rate  case,  in  1893, 
the  principle  was  established  that  the  consumer  should 
pay  enough  to  cover  (a)  the  fair  cost  of  production,  (b)  a 
fair  dividend  on  a  reasonable  amount  of  capital,  and  (c)  an 
additional  amount  sufficient  to  create  a  surplus  against 
extraordinary  contingencies.' 

In  spite  of  the  large  discretionary  power  left  to  the 
Commissioners,  it  is  probably  true  that  no  honestly  man- 
aged company  has  ever  suffered  because  of  the  interpreta- 
tion put  upon  the  terms  "fair"  and  "reasonable."*  Yet 
rates  have  usually  been  regulated  downward,  and  divi- 
dends have  in  certain  cases  been  temporarily  almost  wiped 
out.  The  present  has  occasionally  been  compelled  to  pay 
for  the  financial  follies  of  the  past  The  regulation  is  par- 
ticularly strict  in  cases  in  which  there  seems  to  have  been 
exploitation  by  voluntary  associations:**  "Common  con- 
trol" and  interlocking  directorates  are  frowned  upon. 
Special  rates  are  opposed,  whether  given  to  a  municipality 
or  to  a  private  customer.'    Differential  rates  are  upheld, 

notes  to  the  extent  of  $10,000,000,  petitioned  the  State  Legislature  to 
extend  their  authority  to  cover  the  issue  of  long-time  notes  as  well  as 
that  of  stocks  and  bonds.  However,  no  l^islative  action  was  taken  on 
the  matter. 

1  Mass.  G.  &  E.,  ra:  56.  «  Ibid.,  iv:  79.  »  Ibid.,  nc:  8. 

*  For  an  interesting  comment  on  this  point  by  **the  opposition,"  cf. 
Marks:  186. 

*  Mass.  G.  &  E.,  XXIV :  ccxcix-cccv;  xxv:  15;  xxvn:  36a;  xxrx:  327- 
S67a;  xxx:  49;  xxxi:  19-27,  60-63,  96.  By  an  order  of  December  14, 
1916,  the  Board  endeavors  to  prevent  dealings  between  the  companies 
under  their  supervision  and  other  concerns  with  which  their  directorates 
interlock.  This  is  a  sweeping  order  which  would  probably  not  be  upheld 
in  the  courts. 

*  Ibid.,  xvn:  19,  20;  xxrv:  48. 


54 


MUNICIPAL  ELECTRIC  LIGHTING 


i 


not  in  accordance  with  any  intricate  "cost-of-service" 
principle,  but  for  the  practical  commercial  reason  that 
they  are  needed  at  present  to  get  and  develop  the  busi- 
ness, thereby  causing  an  ultimate  reduction  in  price  to  all 
consumers.  1  Nor  has  the  Board  failed  to  recognize  the 
fact  that  the  length  of  contract  entered  into  by  a  munici- 
pality for  its  street  light  has  a  marked  bearing  upon  the 
price  at  which  that  hght  can  be  secured.^ 

The  Board  has  expressly  avoided  suggesting  what  it  con- 
siders a  "fair"  rate  of  return  on  the  market  value  of  the 
capital  stock.'  No  maximum  profit  is  fixed.  In  fact  it 
would  be  highly  inconsistent  to  stipulate  a  maximum  rate 
of  return  upon  capital  that  has  been  acquired  under  the 
restrictions  and  limitations  of  the  Massachusetts  laws.* 
High  dividends,  however,  are  regarded  as  a  "reward  rather 
than  a  right,"  and  hence  cannot  in  themselves  be  an 
excuse  for  the  maintenance  of  high  prices.'^ 

In  conclusion,  no  more  fitting  statement  could  be  made 
of  the  poUcy  which,  as  an  ideal,  at  any  rate,  has  for  thirty 
years  guided  the  Massachusetts  Board  of  Gas  and  Electric 
Light  Commissioners,  than  to  quote  from  a  recent  address 
of  General  Morris  Schaff,  who  for  twenty-five  years  has 
been  a  member  of  the  Board.  That  policy,  in  a  word,  ia 
this:  — 

Ceaseless  and  resolute  protection  of  the  companies  from  po- 
litical demagogues,  generous  aUowance  to  stockholders  upon  the 
legitunate  and  authorized  capital  of  the  undertaking,  and,  in 
harmony  with  a  long,  deliberate,  and  oft-repeated  policy  of  the 
great  Commonwealth,  insistence  upon  as  low  a  capitalization  as 
ctfciunstances  will  permit  and  such  management  as  will  provide 
for  the  very  best  care  of  the  plant,  anticipating  as  far  as  possible 
eveiy  caU  for  more  and  better  service;  and  finally,  and  above 
all.  m  season  and  out  of  season,  the  cultivation  of  honor  and  a 
high  public  spirit  on  the  part  of  the  directorates.^ 

1  Aiass.  G.  &  E.,  XXIV :  50-55.  But  of.  ibid.,  lani  11-14,  for  an  earlier 
mlmg  to  the  contrary. 

«  Ibid    XXIV :  50-55.         «  Ibid.,  xxx :  40.  *  Ibid.,  xxxi :  25.  26. 

Ibid.,  xxxi :  31.  •  UHl  Mag.,  i :  3 :  137  (January,  1916). 


CHAPTER  III 

MUNICIPAL  AND  PRIVATE  ELECTRIC  LIGHTING  IN 
MASSACHUSETTS:  METHODS  OF  COMPARISON  TO  BE 
FOLLOWED  ^ 

1.  The  Electric  Light  and  Power  Industry  in 

Massachusetts 

The  growth  of  the  electric  light  and  power  business  in 
Massachusetts  has  been  comparatively  free  from  the  spec- 
ulation and  risks  which  have  characterized  the  beginning 
of  the  industry  in  many  of  the  newer  States.  This  has 
been  due  in  large  measure  to  the  fact  that  the  State  at  so 
early  a  period  began  to  regulate  the  companies.  Nor  does 
it  appear  that  the  industry  has  been  seriously  hampered 
by  over-regulation.  Both  public  and  private  plants  have 
rapidly  increased  the  extent  of  their  service.  A  study  of 
the  accompanying  table,  however,  will  show  that  while 
there  has  been  a  great  increase  in  the  investment  in  private 
plants  during  the  past  twenty-five  years,  the  number  actu- 
ally in  operation  has  tended  to  decrease.  In  fact,  in  1890 
the  number  of  companies  of  all  sorts  subject  to  the  control 
of  the  Board,  many  of  which  were  not  actually  in  opera- 
tion, was  fifty  per  cent  greater  than  in  1915.  Though 
many  new  companies  have  been  established,  many  of  the 
older  ones  have  been  merged,  have  changed  their  manage- 
ment and  name,  or  have  ceased  operation.  The  period  of 
most  rapid  increase  was  from  1886  to  1890,  and  during 
1889  there  were  formed  44  new  electric  companies  and 

*  Most  of  the  data  in  this  chapter  have  been  computed  from  the 
thirty-one  Annual  Reports  of  the  Board  of  Gas  and  Electric  Light  Com- 
missioners or  from  the  annual  returns  made  by  the  individual  plants  to 
the  Board.     Specific  references,  under  the  circumstances,  will  usually 
not  be  given,  as  the  presentation  is  the  writer's  own. 


If 


56 


MUNICIPAL  ELECTRIC  LIGHTING 


4  gas  and  electric  companies.^  Since  about  1900  there 
has  been  a  very  considerable  decrease  in  numbers.  2  The 
number  of  municipal  plants,  on  the  other  hand,  has  con- 
tmuously  grown  from  only  one  in  1890  to  39  in  1915, 
while  the  periods  of  greatest  absolute  increase  have  been 
from  1890  to  1895  and  from  1910  to  1915.3 

In  1886  there  were  40  electric  companies  with  an  aggre- 
gate  capital  of  $3,500,000,  and  average  of  $90,000  each  * 
Twenty-nine  years  later  55  solely  electric  companies  re- 
ported a  total  capital  of  ahnost  $40,000,000,  equivalent  to 

*  Mass.  G.  &E.,  v:S5. 

J  Persons,  firms,  and  private  corporations  other  than  electric  companies, 
actually  engaged  m  making  or  distributing  cmtent  for  light  or  power 
Me  mcluded  whenever  the  term  "plants"  or  "stations"  is  used.  Unles^ 
otherwise  mdicated.  the  hydroelectric  companies  are  omitted,  as  they 

bX^'field  "^"^^  ^^""^^  ^  ^^  '^^''^  ^  "*  wlaUvely  new 
»  In  this  connection,  it  may  be  worth  while  to  indicate  the  relative 
importance  of  the  electric  light  and  power  business  in  Massachusetts 
as  «)mpared  with  that  of  the  other  States.  From  the  Census  Report  of 
191^  It  appears  that  the  relations  are  as  shown  in  the  accompanying 

Table  8.   Bklation  of  the  Eleotbical  Industbt  in  Massachusetts 

TO  THAT  IN  Other  States 


Bonk 


For  all 


In  number -i^kh 

In  investment .*.*.*.*.*.'.*.*.**.* I  eS 

|n  output  of  cnrrent i!!!!*!!^ I  7th 

In  generating  capacity .*.*.**.**.'"(  fith 


It  IS  evident,  that,  so  far  as  concerns  the  investment  of  capital  and 
the  actual  business  done,  this  State  ranks  among  the  first  in  the  indus- 
try.  The  municipal  plants,  while  numerically  occupying  only  a  middle 
position  m  1912  stood  sixth  in  point  of  output  of  current.  Of  the  five 
Mates  rankmg  higher  in  this  regard,  only  two,  IlKnois  and  Michigan 
show  a  noticeable  difference,  which,  by  the  way.  is  occasioned  mostly 
by  the  large  publicly  owned  street  lighting  plants  of  Chicago  and  De- 
troit. The  other  three  States.  Ohio,  Wisconsin,  and  Indiana,  rank  very 
close  to  Massachusetts. 


<  Mass.  G.  &E.,  n:57. 


IN  MASSACHUSETTS 


m 


more  than  $700,000  per  company  —  a  sevenfold  increase. 
In  1895  the  assets  of  83  private  plants  doing  an  electric 
lighting  business  amounted  to  more  than  $18,000,000,  or 
about  $220,000  per  plant.  ^  At  the  end  of  twenty  years 
the  average  (for  77  plants)  had  increased  to  almost  $1,200,- 
000,  which  would  be  subject  to  a  still  further  increase  of 
$100,000,  if  the  6  hydro-electric  companies,  with  com- 
bined assets  of  more  than  $15,000,000,  be  included.  The 
average  assets  of  12  municipal  plants  in  1895  were  less 
than  $50,000,2  while  in  1915  we  find  an  increase  to  $120,000 
per  plant.  Since  1900  the  relative  increase  in  the  total 
assets  of  the  two  groups  of  plants  has  been  almost  iden- 
tical —  300  per  cent.  The  proportion  which  the  municipal 
plant  assets  bear  to  the  total  for  all  plants,  excluding  the 
hydro-electric  companies,  has  stood  at  approximately  5 
per  cent  during  the  past  fifteen  years. 


Tabub  4.  Number  op  Central  Electric  Stations  of  All 
Kinds  in  Massachusetts  (1886-1915)^ 


1886 

1890 

1895 

1900 

1905 

1910 

1915 

CmiiiralStaiioM 

. 

1 

1 

•3 

t 

^ 

! 

f 

1 

„    

•3 

t 

^ 

•3 
t 

^ 

1 

$ 

a 

^ 

ss 

s> 

e 

«? 

e 

{) 

s: 

t3> 

S£ 

^ 

^ 

1 

1 

5 

1 

1 

I 

1 

5 

1 

£ 

^ 

Under  superrision  of 

Board  (Jan.): 

Total  number 

•  • 

■  • 

126 

•  • 

83 

10 

97 

17 

94 

23 

97 

29 

83 

39 

Electric 

•  • 

•  • 

100 

•  • 

58 

8 

73> 

14 

68 

17 

70 

25 

61  i 

36 

Oa4  and  electric 

7 

•  • 

26 

•  • 

26 

2 

24 

3 

26 

4 

27 

4 

22 

4 

Actually  in  operation 

(June) : 

Total  number 

42 

•  • 

83 

1 

83 

12 

97 

18 

94 

23 

89 

29 

80 

39 

Electric 

40 

•  • 

66 

•  • 

61 

10 

73« 

15 

68* 

18 

67< 

25 

58 

35 

Gas  and  electric 

2 

•  • 

18 

•  • 

22 

2 

24 

3 

26 

4 

22 

4 

22 

4 

*  Persona,  firms,  and  private  corporations  other  than  electric  companies,  actually  en- 
gaged in  making  or  distributing  current  for  light  or  power,  are  included,  with  the  excep- 
tion of  the  hydro-electric  companies. 

)  Including  14  unincorporated. 

*  Including  11  unincorporated. 

*  Including  12  "  others." 

6  Including  0  "  others  ";  6  hydro-electric  companies  not  included. 

^  The  electric  assets  of  22  gas  and  electric  plants  are  included. 
'  The  gas  plant  assets  are  excluded. 


I' 


MUNICIPAL  ELECTRIC  LIGHTING 

Table  5.  i^sETs  of  Private  and  Municipal  Electric  Light 
Plants  in  Massachusetts  (1891-1915)  * 


IN  MASSACHUSETTS 


S$ 


Character  0/ 
Plant 


Private  plants : 
Total  aaseta. . . . 

Electric 

Electric     as* 

seta  of  gas 

companies. 

Municipal 

plaints: 

Total  aaaeta.... 

Electric 

Ktoctric  as- 
•ets  of  gas 
plantii.... 


1891 


$12,114,531 
9,d31,8SS 


2,182,643 


1S,000 
15,000 


1895 


$18,386,096 
15,620,073 


2,766,023 

(?)868,000 
428,009 

(7)140,000 


1900 


$23,827,077 
20,648,766 

3,178,311 


1,166,686 
970,480 


(?)186,205 


1906 


$38,640,912 
33,520,123 

6,120,789 


2,319,407 
1,435,217 


1910 


(7)884,190 


$54,800,639 
46,963,860 


7,836,779 


3,409,441 
2,296,014 


1,113,427 


1915 


$91,531,184 
77,588,478 


13,942,706 


4,788,470 
3,372,278 


1,416,197 


to  n^  «*'o?Sj'Si"*''n:f*P'°'f'  °°"'*^^  T"'^  '"<=^'^  the  company  as^ts  for  1915 
Jr«m&'pKiZ-  in^febr4^^eToThe'^L,^tt'or'  alwayrco^ver  the  idenlic^ 
may  not  have  returned  the  pro^r'^u  '  ^"^  **'  '''*'  unimportant  plants 

According  to  the  Annual  Report  for  1891,  25  out  of  57 
electric  companies  in  Massachusetts  paid  an  aggregate 
dividend  of  $263,000,  equal  to  4.5  per  cent  on  the  entire 
capital,  and  ranging  from  1  to  10  per  cent  for  the  individual 
companies.  In  1915,  43  of  55  electric  companies  paid  divi- 
dends  of  from  1  to  32  per  cent,  a  total  of  more  than  $4,000  - 
000  equivalent  to  about  10  per  cent  on  the  capital  stock. 
If,  however,  we  include  the  premiums  reahzed  on  the  sale 
of  capital  stock,  as  should  be  done,  the  rate  of  dividend 
becomes  only  6.7  per  cent.  Again,  52  of  the  companies  in 
1891  returned  an  actual  net  surplus  of  $475,000,  or  9  per 
cent  of  the  outstanding  capital,  while  in  1915  the  aggre- 
gate net  surplus  of  55  companies  amounted  to  more  than 
$5,000,000,  or  about  13  per  cent  of  the  capital.    SHght 
deficits  were  returned  for  12  companies  in  1891  and  for  5  in 
1915.   For  the  municipal  plants  there  was  a  total  deficit 
of  $86,000  in  1897,  and  an  aggregate  surplus  of  $800,000 
in  1915,  of  which  $750,000  was  the  reported  surplus  of  the 
Holyoke  plant.  ^ 

It  is  impossible  to  secure  any  accurate  data  regarding 

fr,V  ^)  *^f  tr^i^f  j^  P^^P^^^y  apportioned  between  the  gas  and  the  elec- 
trie  plant,  the  total  becomes  very  much  smaller. 


the  total  output  and  sales  until  about  1907  or  1908,  as 
much  of  the  current  was  not  metered  before  that  time.*  It 
appears,  however,  that  12  of  the  52  plants  operating  in 
1887  were  selling  some  current  for  power  and  all  but  3 
report  a  commercial  lighting  business.^  Ten  years  later, 
though  all  of  the  municipal  plants  but  2,  Needham  and 
Wellesley,  did  a  commercial  lighting  business,^  practically 
no  power  was  furnished  by  them.  Since  1906,  however, 
all  public  plants  do  private  lighting,  and  during  the  past 
ten  years,  the  power  business  of  the  municipal  plants  has 
gradually  increased  until  at  present  the  relative  amount 
of  current  sold  for  this  purpose  is  about  the  same  for  the 
public  as  for  the  private  plants.  Of  the  85  private  plants 
which  operated  at  some  time  during  the  year  1915,  11 
report  no  power  sales,  while  3  and  probably  5  of  the  public 
plants  sold  no  current  for  power.* 

According  to  the  Census  Report  on  Central  Electric 
Light  and  Power  Stations  for  1902,"^  the  estimated  yearly 
output  of  97  private  stations  in  Massachusetts  was  121,- 
600,000  kilowatt  hours,  or  1,250,000  per  plant.  For  17 
public  stations  the  total  output  was  4,200,000  kilowatt 
hours,'  approximately  250,000  per  plant.  In  1915,  75 
private  plants  show  an  average  output  of  more  than 
6,700,000  kilowatt  hours  each,  which  decreases  to  about 
4,000,000  if  we  omit  the  Boston  Edison  with  an  output 
of  nearly  200,000,000  during  the  year.  If,  however,  aU, 
concerns  doing  an  electric  light  and  power  business  are 
counted,^  including  five  hydro-electric  companies,^  it  ap- 

1  Mass.,  1905,  ch.  410,  sect.  5.  The  Board  is  empowered  to  require 
municipalities  to  meter  theur  current. 
«  Mass.  G.  &  E.,  Ill :  59-67. 

*  Three  others,  Braintree,  Danvers,  and  Peabody,  began  doing  only 
street  lighting,  but  soon  added  the  commercial  business. 

*  The  returns  are  made  out  in  such  a  way  as  to  leave  the  matter  doubt- 
ful in  two  cases. 

«  Op.  cU.y  123.  •  Ibid.,  139. 

*  Five  small  plants  did  not  report  the  output  for  the  year. 

"  The  output  of  one  of  the  large  hydro-electric  companies  is  not  given 


MUNICIPAL  ELECTRIC  LIGHTING 

ErS.^l-f  ^^^^""^  ^"^  ^"^  ^^^'^^^  ^"*p"*  «^  ^^^^y 

8  000,000  kilowatt  hours.  The  39  municipal  plants  during 
tne  same  year  had  an  average  output  of  about  1,000,000 
hours;  but  as  Holyoke  alone  produced  more  than  one 
thu-d  of  the  total,  it  should  be  omitted  in  computing  the 
average,  which  then  becomes  650,000.    While  the  output 
per  plant  has  not  increa^d  so  rapidly  in  the  public  as  in 
the  private  stations,  the  relaiive  total  output  has  until  re- 
cently mcreased  much  more  rapidly.  Whereas  m  1902  the 
municipal  output  seems  to  have  been  about  S.3  per  cent 
of  the  total,  It  amounted  in  1907  to  6.0  per  cent,  and  in 
1912  to  7.«  per  cent.    For  1915  the  proportion  stands  at 
7.0  per  cent,  or  at  only  5.4  per  cent  if  the  hydro-electric 
companies  are  included.    The  rapid  increase  during  the 
tot  five-year  period  was  occasioned  by  the  accession  of 
Holyoke,  and  since  1912  there  has  been  a  noticeable  faU- 
ing-oflf.i  .  I 

The  accompanying  table  (Table  6),  though  for  the  earlief 
penods  based  partiaUy  on  estimates,  will  serve  in  a  rough 
way  to  mdicate  the  relation  which  the  unit  (grating  cosU 
and  mcome  bear  to  each  other  in  the  two  groups  of  plants 

As  the  current  used  at  stations,  unaccounted  for,  and 
tost  through  lines,  transformers  and  meters,  could  not  be 
determined  for  1902  and  1907,  only  the  total  output  and 
iK>t  the  amount  actually  sold  has  been  used  in  making 
the  computations  throughout.  For  the  municipal  plants 
the  estimated  value  of  free  service  (public  Ughting)  is 
mcluded  for  every  year  except  1915;  but  for  this  year  the 
actual  commercial  income  is  used  and  the  amount  of 
current  put  out  for  street  Ughting  is  deducted  from  the 
total  output  m  making  the  computation.  This  will  account 
partiaUy  for  the  seemingly  low  income  figure  given  for 

as  it  does  no  toinsmission  business.  One  hydroelectric  company  reports 
an^output  of  125,000,000  kilowatt  hours  for  the  year  endbg  jJ^HoJ 

*  See  Table  6. 


IN  MASSACHUSETTS 


61 


Table  6.  Operating  Expenses  and  Operating  Income  per 
Kilowatt  Hour  Output  in  Public  and  Private  Plants 
(1902-1915)  1 


Dal0 

O-peraHng  expenses  per  kilowatt 
hour  output    {cents) 

Income  from  sale  qf  current  per 
kilouxtU  hour  output    (cents) 

Companies 

Municipal 

Companies 

Municipal 

1902 
1907 
1912 
1915 

S.S8 

.     2.77 
2.22 
2.12 

5.21 
3.26 

2.77 

2  44 

(3.'03)« 

5.41 
4.72 
3.76 
3.46 

6.31 
^.63 
4.53 
3.61 

(4.40)« 

t  The  data  on  which  this  table  is  based  are  derived  from  the  Census  Beporb  for  1902, 
1907,  and  1914,  from  the  Annual  Reports  of  the  Board  for  the  same  dates  and  for  19lO| 
and  from  a  study  of  the  municipal  returns  for  1915. 

<  Excluding  Holyoke. 

1915,  which  would  have  been  4.40  cents  had  the  pubKc 
plant  of  Holyoke  been  omitted,  since  it  is  too  large  to  be 
tyiMcal  of  this  group  of  plants.  It  must  also  be  explained 
that  the  decided  decrease  in  the  unit  cost  of  municipal 
plants  from  1902  to  1907  is  in  large  measure  due  to  the 
fact  that  the  Holyoke  plant  was  taken  over  during  that 
period.^  Furthermore,  we  must  remember  that  only  by 
making  allowance  for  the  difference  between  (mtpiU  and 
sales,  varying  from  plant  to  plant  and  in  many  cases 
amounting  to  25  per  cent  of  the  total,  can  any  fair  basis 
of  comparison  be  established.  The  nature  of  the  business 
done,  the  character  of  the  territory  served,  the  age  and 
size  of  the  plants,  the  kind  of  primary  power  used,  and 
many  other  factors,  must  all  be  considered  if  we  wish  to 
be  accurate.  Finally,  in  the  case  of  the  public  plants  the 
"operating  expenses,"  as  returned  and  as  used  in  the 
computation,  by  no  means  represent  the  real  costs.  Of 
this  more  will  be  said  later.   The  figures  serve  to  show, 

^  Holyoke  began  operation  as  a  municipal  i^ant  at  the  end  of  19Q2,aDd 
made  no  return  until  1903. 


MUNICIPAL  ELECTRIC  LIGHTING 
however    that  both  municipa]  and  private  plaats  have 

reSLTtor^'^Kl"'^  ''°'^''"*^'  combination  previously 
referred  to  have  been  very  marked  m  the  electric  lighting 

?0wTl«^7r"  ""  ^^^-'^I'^-tt^.  Particularl/sincf 
1000    In  1887  there  were  52  plants  actually  in  operation 

^tt'oTrl  "^  ''  ^^"^"^  *°-^  ^'^  ««?  "nd 
U1.1900.  97  plants  supplied  124  municipalities.    But  80 

private  plants  reporting  in  1915  did  business  in  248  differ- 

plied  39  »  The  39  public  plants  at  the  same  date  furnished 
current  to  only  43  cities  and  towns.  There  have  ar£n 
alarge  number  of  combinations  of  gas  and  electtT^! 
panics,  while  many  gas  companies  have  undertaken  the 
«IPPJ  of  electricity,  thus  effecting  certab  economi^p^! 
bcxiarly  m  management.  The  proportion  of  such  com- 
posite plants  has  remained  nearly  constant  for  more  th^n 

total  m  1915.  Finally,  at  least  30  per  cent  of  all  the  private 
plants  are  owned  or  controDed  by  six  voluntaiy  LoZ 

Tlal  T^^.^f-^-^  groups  of  invest^  oonZ 
a  krge  portion  of  the  rest.  This  aspect  of  the  question, 
however,  is  scarcely  relevant  to  the  subject  under  di^: 

Of  great  significance  is  the  fact  that  while  in  1887  the 
52  p  ants  mentioned  aU  generated  their  own  curreni' 
twenty  years  later  17  of  the  69  private  plants  reported,  or 
25  per  cent  of  the  total,  produced  no  current.'  and  in  1915 
out  of  80  plants  32,  or  40  per  cent,  were  buyig  S  S  ^l^ 

•For  mteresting  dbcmsions  of  «>MoIidaUon  and  common  control  see 

*  Cf.  Mass.  G.  &  E,  xxvn:  316a. 

•  iwtf.,  xxiv:ccxcix. 


IN  MASSACHUSETTS 


09 


current.  At  the  latter  date  at  least  half  as  many  more 
were  purchasing  some  current,  in  several  cases  more  than 
50  per  cent  of  their  output.  This  change  has  been  due 
largely  to  the  fact  that  many  of  the  smaller  concerns  for- 
merly generating  their  own  current  have  found  it  more 
profitable  to  buy  from  the  larger  companies,  and  par- 
tially to  the  fact  that  within  recent  years  a  number  of 
plants  have  commenced  operation  with  only  a  distributing 
system.  Of  the  municipal  plants  about  20  per  cent  pro- 
duced no  current  during  the  period  1895-1906,  while  at 
the  beginning  of  1916  the  proportion  had  increased  to  60 
per  cent  of  the  total,  23  out  of  39  plants,  and  two  others 
were  buying  the  greater  part  of  their  current.  ^  By  the  end 
of  1917,  however,  only  11  of  these  plants  were  generating 
current.  Thus  it  appears  that  50  per  cent  of  the  electric 
plants  in  the  State  are  now  buying  all  of  their  current. 

The  accompanying  table  (Table  7)  has  been  arranged 
for  the  purpose  of  showing  the  relative  amounts  of  current 
purchased  by  public  and  private  plants  in  1907  and  1915. 
Re-sales  have  been  deducted  whenever  they  could  be  as- 
certained.* -»  ^* 

In  1907  the  companies  bought  3.6  per  cent  of  their  total 
output,  while  in  1915  the  amount  had  increased  to  ap- 
proximately 10  per  cent,  either  excluding  or  including  the 
hydro-electric  companies  which  also  purchase  a  consider- 
able quantity  of  current.  The  proportion  purchased  by 
municipal  plants  has  also  increased  at  an  equal  rate  from 
6.6  per  cent  to  18.4  per  cent.  Upon  analysis  it  appears 
that  the  private  plants  in  1915  purchased  a  total  of  50,000,- 
000  kilowatt  hours,  of  which  more  than  12,000,000  were 

*  Wakefield  ceased  generating  current  during  the  fiscal  year  1914-15, 
and  Hull,  at  the  end  of  1915,  voted  to  purchase  her  current  in  the  future. 
During  the  next  two  years  five  other  plants  followed  suit. 

2  Only  round  numbers  are  given,  and,  in  places,  estimates  had  to  be 
used.  The  computations  are  based  on  data  which  can  be  found  in  very 
unsatisfactory  shape  in  the  following  sources;  Central,  1907:  153.  165; 
Mass.  G.  &  E.,  xxm:  167.  and  xxxi:  332a-336a,  360a. 


64  MUNICIPAL  ELECTRIC  LIGHTING 

Table  7.  Number  of  Kilowatt  Hours  generated  and 
purchased  (1907  and  1915) 


KilowaH  hours 

1907                       i 

1911 

f 

output 

Companies 

Municipal 

Companies 

Municipal 

Generated. . . . 
Purchased 

198,500,000 
7,500,000 

12,200,000 
800,000 

596,000.000 
(457,000,000)1 
66,000,000 
(50,000,000)» 

31,000,000 
7,000,000 

Total.. 

206,000,000 

18,000,000 

662,000,000 
(507,000.000)1 

38,000.000 

*  Hydro-electric  companies  excluded. 

secured  from  each  other,  about  8,0(X),000  from  various 
manufacturing  concerns  and  street  raOways,  and  30,000,- 
000  from  the  hydro-electric  companies.  If  the  hydro- 
electric companies  are  included,  the  total  becomes  about 
66,000,000,  and  it  is  found  that  in  addition  to  the  above 
purchases  the  latter  bought  more  than  10,000,000  kilowatt 
hours  from  the  electric  companies  and  6,000,000  from  each 
other.  Of  the  7,000,000  hours  purchased  by  municipal 
plants,  340,000  were  secured  from  each  other,  1,350,000 
from  hydro-electric  companies,  and  5,300,000  from  various 
electric  companies.  If  we  compare  the  data  here  given 
with  the  number  of  plants  which  generate  no  current,  it  is 
obvious  that  for  the  most  part  only  tie  smaller  plants  are 
buying  their  current. 

A  study  of  Table  8  will  disclose  the  fact  that  22  per 
cent  of  all  private  plants  serve  a  population  under  3,000, 
15  per  cent  a  population  between  5,000  and  10,000,  and 
56  per  cent  a  population  greater  than  10,000.  On  the 
other  hand,  44  per  cent  of  the  municipal  plants  serve  dis- 
tricts with  less  than  3,000  inhabitants,  33  per  cent  a  popu- 
lation ranging  from  5,000  to  10,000,  and  only  21  per  cent 
a  population  greater  than  10,000.  Absolutely,  the  largest 


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66 


MUNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


67 


f: 


number  of  central  stations  is  found  in  the  population 
groups  under  3,000  and  between  20,000  and  50,000  for  the 
companies,  and  in  the  groups  under  3,000  and  between 
5,000  and  10,000  for  the  municipalities.  Of  the  private 
plants  generating  their  current,  80  per  cent  serve  popula- 
tion groups  in  excess  of  10,000,  while  less  than  40  per  cent 
of  the  public  plants  serve  such  groups.  Private  generating 
plants  are  found  to  be  most  numerous  in  the  population 
group  between  20,000  and  50,000,  amounting  to  33  per 
cent  of  the  total.  The  largest  number  of  public  generating 
stations,  5(i  per  cent  of  the  total,  is  met  with  in  the  5,000 
to  10,000  group.  There  is  a  similar  inverse  correspondence 
in  the  case  of  plants  buying  all  of  their  current.  Of  the 
companies  38  per  cent  serve  population  groups  under  3,000, 
and  53  per  cent  serve  groups  of  more  than  5,000.  But  70 
per  cent  of  the  municipal  distributing  plants  are  found  in 
places  with  less  than  3,000  inhabitants,  and  only  26  per 
cent  serve  groups  larger  than  5,000.  The  highest  absolute 
numbers  in  each  case  are  found  in  the  population  groups 
under  3,000  and  between  5,000  and  10,000.  Finally,  it  is 
interesting  to  note  that,  early  in  1916,  10  of  the  private  as 
well  as  10  of  the  public  generating  stations  served  districts 
with  less  than  10,000  population,  and  that  24  private  and 
21  pubHc  distributing  plants  (75  and  90  per  cent  of  the 
respective  totals)  are  found  in  the  same  groups.  This  fact 
would  suggest  the  possibility  of  making  some  useful  com- 
parisons between  municipal  plants  and  the  smaller  com- 
panies, if  other  conditions  are  found  to  be  approximately 
equal,  though  there  is  not  necessarily  any  quantitative 
relation  between  the  population  of  the  district  served  and 
the  output  of  a  central  station. 

From  these  preliminary  surveys  it  is  evident  that  the 
public  plants,  situated  for  the  most  part  in  the  smaller 
municipalities,  constitute  more  than  30  per  cent  of  the  total 
number  of  central  stations  in  Massachusetts,  represent 
about  5  per  cent  of  the  total  assets,  and  put  out  about  7 


per  cent  of  the  current  (4.3  per  cent  of  the  assets  and  5.4  per 
cent  of  the  output,  if  the  hydro-electric  companies  be  in- 
cluded). Though  the  casual  student  might  be  induced  by 
these  figures  to  draw  the  conclusion  that  the  public  plants 
are  doing  a  proportionately  greater  business  with  a  smaller 
capital  outlay  than  the  private  concerns,  the  data  are,  for 
numerous  reasons,  scarcely  comparable  except  in  the  most 
general  sort  of  way. 

In  the  first  place,  the  Holyoke  plant  alone  accounts  for 
one  fourth  of  the  assets  and  more  than  one  third  of  the 
output  of  current  for  the  municipal  plants.  This  fact  tends 
to  make  any  general  averages  practically  worthless,  for 
what  is  true  of  Holyoke  is  by  no  means  true  of  the  remain- 
ing plants.  Its  effect  upon  the  averages  is  too  great.  Sim- 
ilarly it  may  be  argued  that  the  Boston  Edison,  with  50 
per  cent  of  the  assets  of  all  private  plants  (hydro-electric 
companies  excluded)  and  producing  two  fifths  of  the  cur- 
rent supplied,  distorts  the  averages  for  the  other  group. 

Again,  many  of  the  private  plants,  having  ceased  either 
wholly  or  in  part  to  generate  current,  are  burdened  with  a 
large  investment  in  useless  generating  equipment  —  dead 
assets.  This  was  true  of  only  two  or  three  of  the  municipal 
plants,  at  the  time  under  consideration.  Furthermore, 
many  of  the  pubUc  plants,  particularly  those  buying  cur- 
rent, carry  no  account  for  real  estate  which  has  been  taken 
over  from  the  municipality  or  which  is  owned  by  another 
"department,"  and  when  they  do  carry  this  account  it  is 
usually  placed  low.  Also  they  have  very  frequently  exer- 
cised their  franchise  right  of  attaching  their  lines  to  foreign 
poles,  whereas  the  companies  generally  own  their  own 
poles.  All  of  these  facts  would  naturally  tend  to  make 
the  plant  accounts  of  municipal  stations  relatively  less 
than  the  company  accounts. 

Practically  no  underground  construction  has  been  in- 
stalled by  the  public  plants,  whereas,  even  in  1911,  50  per 
cent  of  the  value  of  the  distributing  systems  of  the  private 


68 


MUNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


6S 


s 


^:i. 


M 


plants  was  accounted  for  by  the  underground  lines  and 
conduits.^  At  the  same  time  40  per  cent  of  the  total  invest- 
ment of  the  companies  was  in  their  distributing  systems. 
Hence,  as  there  has  been  a  rapid  growth  of  underground 
construction  during  the  past  few  years,  a  conservative 
estimate  would  put  the  aggregate  value  of  the  under- 
ground systems  at  about  25  per  cent  of  the  total  invest- 
ment. And,  since  this  item,  in  the  majority  of  cases,  prob- 
ably represents  by  so  much  an  absolute  addition  to  the 
investment,  due  to  the  cost  of  changing  from  the  old 
overhead  system,  this  alone  would  be  almost  sufficient  to 
reverse  the  relation  which  above  appeared  to  exist  between 
the  proportionate  assets  of  the  municipal  plants  and  their 
proportionate  output  of  current. 

Finally,  the  plant  accounts  as  carried  by  the  municipali- 
ties have  been  constantly  written  off  each  year  for  depre- 
ciation, at  the  rate  of  5  per  cent  until  1907,  and  at  the  rate 
of  3  per  cent  in  most  cases  since  that  date.  The  policy  of 
the  private  plants  has  been  very  irregular  in  this  regard. 
Accordingly  their  plant  accounts,  when  compared  with 
those  of  the  public  plants,  will  appear  unduly  large. 

This  is  a  mere  suggestion  of  some  of  the  more  obvious 
conditions  and  considerations  which  totally  invalidate  the 
conclusions  of  one  who  attempts  to  make  comparisons  of 
this  kind  en  masse.  Other  plausible  comparisons  would  be 
subject  to  similar  criticisms.  A  more  careful  study  of  the 
countless  determining  factors  is  demanded,  and  in  the  end 
our  conclusions,  if  really  scientific,  will  doubtless  be  rela- 
tive rather  than  absolute.  Hence,  with  this  general  out- 
line of  conditions  to  serve  as  a  crude  sort  of  guide  to  our 
future  study,  no  further  attempt  will  be  made  to  establish 
any  general  comparisons  between  municipal  and  private 
electric  lighting.  A  point  has  at  last  been  reached  where 
we  can  get  our  bearings,  and  attempt  to  apply  those 
methods  of  investigation  which  may  prove  most  fruitful, 

>  Mass.  G.  &  E.,  xxvn:  SSOa. 


Before  this  task  is  begun,  however,  a  brief  additional 
reference  must  be  made  to  the  history  of  municipal  elec- 
tric lighting  in  the  State. 

At  an  earlier  date  opinions  were  divided  as  to  the  effect 
which  the  Massachusetts  laws  have  had  upon  the  growth 
of  municipal  electric  lighting.  Some  ardent  champions  of 
public  ownership  at  any  price  have  contended  that  the 
provision  in  the  law  making  it  p)ossible  for  an  already 
existing  plant  to  force  the  sale  of  its  property,  both  gas 
and  electric,  upon  a  municipality  wishing  to  begin  business 
for  itself,  is  decidedly  unreasonable,  and  that  it  should 
at  least  be  permissible  for  a  city  or  town  to  install  its  own 
street  lighting  system  without  such  a  restriction.  Others 
have  maintained  that  public  ownership  has  been  directly 
fostered.^  The  truth  of  the  matter  seems  to  be  that  many 
municipalities  have  been  deterred  from  taking  the  decisive 
step  because  of  the  caution  and  deliberate  action  which 
the  law  induces.  It  is  equally  true  that  when  public 
plants  have  been  started,  they  have,  for  the  most  part,  been 
enabled  to  make  a  fair  success  of  the  undertaking,  by  rea- 
son of  the  restrictions  imposed  by  the  law,  the  aid  rendered 
by  the  Board,  and  the  active  interest  taken  by  the  com- 
mimity. 

Of  the  39  publicly  owned  plants  in  the  State,  16,  or  41 
per  cent,  have  been  transferred  from  private  ownership. 
Half  of  this  number  were  generating  plants,  4  of  which  did 
solely  an  electric  business  ^  and  4  a  combined  gas  and  elec- 
tric business.^  The  remaining  8  plants  never  generated 
current,  and  in  three  cases  a  local  plant  was  taken  over,* 
while  in  five  cases  only  the  distributing  system  of  an  out- 

*  For  some  expressions  of  opinion  on  either  side  of  the  question,  cf. 
Matthews,  Rept.  Brook.:  16,  27-29;  Adams,  in  Pol.  Sc.  Quart.,  xvii:  247- 
255;  Central,  1902:  84:  and  Parsons,  Commons,  and  Bemis,  in  op.  cU. 

*  Hull  (1894),  Chicopee  (1896),  Hudson  (1897),  and  Taunton  (1897). 
»  Middleborough   (1893),  Wakefield    (1894),  Westfield    (1899),  and 

Holyoke  (1902). 

*  Ashburnham  (1908),  Middleton  (1913),  South  Hadley  (1914). 


m 


MUNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


71 


side  company  was  bought.^  Seven  of  the  generating  plants 
were  bought  before  1900  and  the  other  one  shortly  after- 
ward. Only  two  of  the  distributing  plants  were  acquired 
during  this  time. 

Table  9.  Private  Plants  changing  to  Municipal 

Ownership 


Character  qf -plant 


Generating  plants 

Distributing  systems  (or 
plants) 

Totel 


Before 

1895 

1896  to 
1900 

1901  to 
1905 

1906  to 
1910 

1911  to 
1915 

3 

4 

1 

0 

0 

1 

1 

0 

3 

3 

4 

5 

1 

S 

S 

Total 

8 

8 

16 


In  every  instance  in  which  a  municipality  has  decided 
to  do  its  own  lighting,  the  local  company,  if  there  was  one, 
has  expressed  its  willingness  to  sell,  and  in  accordance 
with  the  law  the  sale  has  been  made,  with  the  single  ex- 
ception of  North  Attleborough,  which  disregarded  the  law, 
built  its  own  plant,  and  forced  the  existing  company  to 
move  elsewhere.  2  These  transactions,  however,  were  usu- 
ally accompanied  by  a  good  deal  of  litigation.  An  amicable 
agreement  as  to  the  price  of  the  property  to  be  conveyed 
was  made  in  but  seven  cases  —  all  very  small  plants  and 
only  two  with  a  generating  system.'  In  the  nine  remaining 
cases,  six  of  which  were  generating  plants,  the  courts  and 
specially  app>ointed  commissioners  had  to  decide  upon  the 
terms  of  transfer.* 

As  might  have  been  expected,  the  owners  fought  for  a 
higher  price  than  the  municipalities  wished  to  pay,  while 

1  Hingham  (1895),  Belmont  (1898),  Wellesley  (commercial  lighting 
system,  1906),  Groveland  (1907),  and  Lmienburg  (1914). 

*  Mass.  G.  &  E.,  rx:  50;  Adams,  Pol.  Sc.  Quart.,  xvn:  249. 

*  Middleborough,  Hull,  Hingham,  Wellesley,  Ashbumham,  Middle- 
ton,  Lunenburg. 

<  Chicopee,  Wakefield,  Westfield,  Hudson,  Taunton,  Holyoke,  Bel- 
mont, Groveland,  South  Hadley. 


the  latter  stood  out  frequently  for  a  ridiculously  low  figure. 
Though  the  awards  seem  to  have  been  perfectly  fan-  to 
both  parties,  since  no  intangibles  could  legally  be  included 
in  the  valuation,  yet  it  has  frequently  been  asserted  that 
in  most  of  the  ten  instances  of  purchase  before  1902  the 
municipalities  paid  too  much  for  their  plants,  as  shown  by 
higher  fixed  charges,  higher  commercial  lighting  rates,  and 
a  higher  cost  of  street  lighting  than  in  the  other  plants.  ^ 

It  is  probably  true  that  the  municipalities  building  their 
own  generating  plants  had  an  advantage  over  those  com- 
pelled to  buy,  as  they  could  utilize  all  the  latest  develop- 
ments in  the  industry  and  could  profit  by  the  lower  cost 
of  equipment.  None  of  these  (10  in  all)  were  equipped  for 
both  commercial  and  street  lighting  until  after  1893,  and 
4  of  them  after  1900.*  Of  the  generating  plants  acquired 
from  private  owners,  on  the  other  hand,  7  out  of  8  began 
operation  before  1889,'  at  a  time  when  the  electric  busi- 
ness was  in  a  highly  experimental  stage.  Countless  mis- 
takes and  miscalculations  were  constantly  being  made,  pa- 
tent rights  and  machinery  were  seemed  at  exorbitant  prices, 
and  depreciation  from  obsolescence  and  from  inadequacy 
was  exceedingly  rapid.  The  business  was  not  seasoned, 
early  losses  were  great,  and  dividends  were  very  uncertain. 

»  Cf.  Adams:  Mun.  Eng.,  xxv:  232-240;  also  Mun.  Monop. :  154-155. 
223-228,  where  an  attempt  is  made  to  prove  that  in  spite  of  these  handi- 
caps municipal  rates  were  lower  than  private  rates.  For  a  discussion 
of  the  bitterly  contested  Holyoke  case  see  Adams  in  Q.  J.  E.,  xvii:  643- 
608,  and  vol.  xvi  of  the  Holyoke  Case  (Nathan  Matthews'  Brief).  Adams 
mamtained  that  Holyoke  paid  about  twice  as  much  as  the  plant  was 
worth,  while  Mr.  Matthews  has  informed  the  writer  that  beyond  a  doubt 
the  city  secured  its  plant  at  half  price!  So  much  for  expert  opinions  on 
valuation.  The  later  history  of  the  plant  indicates  that  the  city  made 
no  bad  bargain,  considering  the  nature  of  the  territory. 

2  Danvers  (street  lighting,  1889,  commercial  lighting,  1896),  Braintrec 
(streets,  1892,  commercial,  1894),  Peabody  (street,  1892,  commercial 
1893),  North  Attleborough  (1894),  Marblehead,  and  Reading  (1895), 
Concord  (1900),  Ipswich  (1908),  Merrimac  and  Mansfield  (1904). 

»  Taunton  (1882),  Hudson  (1886),  Chicopee  and  Westfield  (1887), 
Wakefield  and  Holyoke  (1888),  Middleborough  (1889).  Hull  (1893). 


7f 


MUNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


i 


Hence,  even  disregarding  the  intangible  items,  it  is  easy 
enough  to  see  that,  in  order  to  recoup  the  owners  for  their 
bona  fide  investment,  municipalities  were  in  some  instances 
obliged  to  pay  more  for  their  old  plants  than  would  have 
been  suflScient  to  construct  new  ones  of  a  better  type,  and 
frequently  a  part  of  the  equipment  was  rapidly  junked. 
However,  the  question  is  largely  one  of  speculative  interest. 
Municipalities,  even  though  they  may  in  one  or  two  cases 
have  acquired  antiquated  plants,  have  not  fared  half  so 
badly  m  this  regard  as  have  practically  all  the  companies. 
Early  in  1915  some  kind  of  action  on  the  question  of 
municipal  ownership  had  been  taken  by  105  cities  and 
towns,  or  30  per  cent  of  all  municipalities  in  the  common- 

Tablb  10.  Action  taken  by  Massachitsetts  Cities  and 
Towns  regarding  Municipal  Ownership  op  Electric 
Lighting  (1895-1915)  ^ 


CUu$ifleation 


1.  Municipalities  taking 

action 

f.  Municipalities   begin- 
ning operation 


Batio  of  2  to  1  (per  cent). 


BtSorn 
1896 


45 
12 

26.7 


1896  to 
1900 


18 
6 
8S.3 


1901  to 
1906 


9 

5 

55.5 


1906  to 
1910 


20 
7 
85.0 


1911  to 
1916 


IS 

11 

84.6 


TotaU 


105 

41 

(80)« 
80.0 

(37.1)« 


-.V  ♦!''  ^'  'f'^^F'  i^**'^j'*  •'*"'^^  municipality  taking  action  at  a  certain  time  baa  be- 

S!.iSy°£l"n  place?  *  ^  "^  ^"'^    ^^*  ^^'  ^'''"^^'  '^'*'''  ''^*'  ^ 

*  Actually  in  operation  in  1915. 

wealth.  Of  this  number,  77  had  brought  the  matter  to  a 
vote,  —  69  in  popular  elections  and  8  in  the  city  councils, 
—  26  had  sunply  appointed  investigating  committees,  and 
«,  Danvers  and  Miller's  Falls,  had  acquired  their  plants 
under  special  acts  of  the  Legislature.  Nearly  60  per  cent 
of  the  municipalities  which  have  submitted  the  matter  to 
a  popular  vote  have  adopted  public  ownership,  while 
nearly  40  per  cent  of  all  those  which  have  taken  any  action 


whatever,  or  11  per  cent  of  the  353  towns  and  cities  in  the 
State,  are  at  present  operating  their  plants. 

It  appears  from  Table  10  that  a  good  deal  of  enthu- 
siasm on  the  subject  of  municipal  ownership  was  aroused 
before  1895.  This  was  probably  due  largely  to  ignorance 
of  the  real  issues  involved,  as  well  as  to  a  desire  to 
make  use  of  the  privilege  newly  created  by  law  with  a 
view  to  securing  lower  rates.  That  so  little,  comparatively, 
was  accomplished,  can  doubtless  be  explained  by  the  fact 
that  almost  no  ciurent  was  sold  by  one  station  to  another 
at  that  date.  Hence,  a  municipality  was  confronted  by 
the  proposition  of  building  or  buying  its  entire  generating 
and  distributing  plant  at  a  high  cost.  As  time  has  gone  on, 
however,  the  agitation  has  become  less  and  the  effective 
action  relatively  greater,  until  in  the  latest  period  prac- 
tically every  town  considering  the  question  has  acquired  a 
plant.  Upon  comparing  this  table  with  the  others  it  is  evident 
that  the  comparative  ease  and  inexpensiveness  of  installing 
a  distributing  system  in  small  towns  whose  business  is  not 
particularly  desired  by  the  companies,  and  the  possibiUty 
of  buying  cheap  current  from  large  central  stations,  have 
acted  as  a  stimulus  to  this  "small  scale"  public  industry. 

The  accompanying  table  presents  this  phase  of  the 
development  clearly. 

Table  11.  Mitnicipal  Plants  BEonnoNo  Operation  at 

Certain  Dates 


Ckaraeter 

Bi^on 
1890 

1891  to 
1896 

1896  to 
1900 

1901  to 
1905 

1906  to 
1910 

1911  to 
1915 

TotaU 

Plants  generating 
current 

1 
0 

8 

3 

5 
1 

4 

1 

0 

71 

0 

11» 

18 

23 

Plants  buying 
current 

Total 

1 

11 

6 

5 

7 

11 

41 

I  One  ceased  operation  at  each  of  these  dates.  Hence  2  should  be  deducted  to  show  the 
net  mcreaae. 


74 


MUNICIPAL  ELECTRIC  LIGHTING 


Since  1904  not  a  single  generating  plant  has  been  pur- 
chased or  built.  Two  plants  formerly  producing  their  cur- 
rent, Wakefield  and  Hull,  have  within  the  last  year  or  two 
ceased  to  do  so  and  are  doing  only  a  distributing  business. 
Two  others,  Chicopee  and  North  Attleborough,  will  doubt- 
less soon  follow  the  same  policy.^  Only  two  municipal 
plants  have  become  defunct,^  Needham,  which  did  a 
street  lighting  business  from  1893  to  1908,  and  Miller's 
Falls,  which  operated  from  1903  to  1912.  Both  bought 
their  current,  and  both  sold  their  distributing  system  to 
private  companies  when  they  ceased  operation.  Since 
1907,  18  distributing  plants  have  been  launched,  almost 
50  per  cent  of  the  total  number  of  public  plants,  and  11  of 
these  are  accounted  for  in  the  three-year  period  1911-1914. 
This  fact  would  seem  to  indicate  that  the  smaller  towns 
expect  a  very  considerable  saving  as  a  result  of  municipal 
ownership.  Though  it  is  perhaps  too  early  to  say  whether 
this  expectation  will  be  realized,  the  question  will  later  be 
fully  discussed. 


2.  Methods  of  Comparison  to  be  foli/)wed 

The  relative  status  of  municipal  electric  lighting  in  the 
State  has  been  suflSciently  indicated.  If  the  student  of  this 
problem  wishes  to  draw  any  definite  or  even  reasonable 
conclusions,  he  must  conduct  his  investigation  in  an 
orderly,  specific  manner.  Things  fairly  comparable  must 
be  compared.  If  the  survey  be  too  extensive,  many  of  the 
vital  issues  will  tend  to  be  obscured  by  a  mass  of  compli- 
cated and  conflicting  data.  On  the  other  hand,  if  the  study 

1  Within  a  few  months  after  the  above  was  written,  not  only  these 
plants  but  three  others  as  well  had  stopped  the  generation  of  current 
(Mansfield,  Merrimac,  and  Middleborough). 

2  After  this  had  been  written  the  writer  discovered  that  the  town  of 
West  Springfield  owned  a  distributing  system  for  about  sixteen  years. 
Becoming  greatly  dissatisfied,  however,  it  sold  its  lines  to  the  United 
Electric  Company  of  Springfield,  in  1914.  No  returns  were  ever  made 
to  the  Board,  which  seemed  to  be  unaware  of  its  existence. 


IN  MASSACHUSETTS 


76 


be  narrowed  to  a  comparison  of  only  one  or  two  public 
plants  with  the  same  number  of  private  ones,  while  the 
work  would  be  greatly  simplified,  the  conclusions  reached 
would  have  to  be  revised  for  every  new  case  which  might 
arise.  A  sufficient  number  of  observations  must  be  made 
to  enable  the  investigator  to  establish  some  norm  and  to 
eliminate  the  extremes. 

The  object  of  the  present  study  is  to  determine  as  nearly 
as  may  be  the  results  of  municipal  electric  fighting  in 
Massachusetts,  viewed  not  merely  from  one  or  two  angles, 
but  from  all  angles.  No  absolute  standard  of  measure- 
ment can  be  set.  Though  balance  sheets,  operating  ac- 
counts, and  rates  have  been  usually  zealously  invoked  in 
researches  on  this  subject,  they  alone  can  indicate  but  a 
limited  portion  of  the  real  issues  involved,  for  they  are 
relative  rather  than  fundamental  considerations.  They  are 
the  results  of  other  factors  not  so  easily  discoverable,  but 
in  many  cases  far  more  significant. 

The  question  is  still  further  complicated  by  the  fact  that 
public  and  private  business  are  being  carried  on  side  by 
side,  with  the  latter  greatly  predominating.  The  tests 
which,  in  themselves,  it  might  seem  reasonable  to  apply 
to  publicly  owned  plants,  might  prove,  on  the  one  hand, 
hopelessly  inadequate,  or,  on  the  other  hand,  highly  unfair, 
if  we  endeavor  to  apply  them  to  private  business.  Hence, 
in  order  to  direct  our  investigations  along  fruitful  lines 
and  to  verify  our  conclusions,  it  is  absolutely  necessary  to 
make  comparisons  at  every  turn,  to  study  private  indus- 
try just  as  carefully  as  public  industry,  and  to  measure 
the  latter  by  the  same  standards  which  the  industrial 
world  applies  to  the  former.  Due  weight  will  be  given,  as 
occasion  may  arise,  to  any  peculiar  or  unusual  conditions 
which  frequently  characterize  certain  phases  of  municipal 
ownership,  and  like  allowance  will  be  made  for  abnormal 
conditions,  if  such  there  be,  in  the  private  plants  under 
consideration.  Above  all,  an  attitude  of  mental  neutraUty 


76 


MUNICIPAL  ELECTRIC  LIGHTING 


will  be  maintained  throughout.  Though  the  writer  wiU, 
whenever  possible,  point  out  what  seem  to  be  the  correct 
conclusions  and  inferences  to  draw  from  the  data  under  con- 
sideration,  he  is  not  only  willing,  but  highly  desirous,  that  the 
case  shall  be  decided  solely  upon  its  own  merits.  His  aim 
will  be  simply  to  present  the  truth  in  a  clear  way,  without 
reading  into  his  interpretations  any  personal  prejudices. 

Probably  no  two  electric  lighting  plants  are  in  all  re- 
spects fully  comparable.  A  multitude  of  technical  factors, 
external  as  well  as  internal,  tend  to  disturb  any  nice  theo- 
retical balance  which  may  be  established.    Though  very 
similar  physical  conditions  be  found,  yet  the  intangible 
Items  of  management  and  coordination  of  effort  on  the  part 
of  employees  may  produce  totally  unexpected  results.  Our 
problem  is  slightly  simplified,  however,  by  confining  the 
study  to  one  small  State,  thereby  eliminating  numerous 
legal,  psychological,  and  climatic  differences.  Certmn  gen- 
eral grounds  of  comparison,  under  the  circumstances,  are 
reasonably  well  defined,  and,  while  any  individual  plant 
may  vary  greatly  from  the  norm,  the  averages  derived  from 
the  study  of  a  sufiSciently  large  group  of  similar  plants  wiU 
probably  disclose  the  true  conditions  with  suflicient  accu- 
racy for  our  purposes. 

Central  electric  stations  naturally  fall  into  two  groups, 
those  producing  current  and  those  purchasing.  Regarding 
the  first  class  we  wish  to  know  further  whether  they  gen- 
erate aU  of  their  current  or  only  part  of  it,  and  whether 
they  do  a  composite  business,  gas,  water,  heating,  or  manu- 
facturing, as  well  as  an  electric  lighting  and  power  business. 
Then  we  must  consider  the  source  of  primary  power, 
whether  it  be  coal,  fuel  oil,  water,  or  gas.  Next  the  output 
of  current  is  highly  significant,  as  well  as  the  load  factor 
and  the  diversity  iacior,^  which  indicate  pretty  clearly 
the  nature  and  extent  of  the  business  done  as  well  as  the 

»  For  an  explanation  of  these  terms  and  their  significance  the  reader 
IS  referred  to  the  following  chapter,  pp.  97-98,  117. 


»!*' 


,i 


70°30' 


30 


GEOGRAPHICAL    DISTRIBUTION 

OF  72  ELECTRIC  LIGHT  PLANTS 

IN  MASSACHUSETTS  (I9I4-I9I5) 

"Ar   Municipal  Generating  Plants  (18) 
O    Municipal  Purchasingr  Plants  (2  1) 
*  Company  Generating  Plants  (17) 
O    Company  Purchasing:  Plants  (16) 


72°30'  Longitude 


72'         West       from 


Greenwich 


70°30' 


42 
30 


^ 


t 


u 


)» 


IN  MASSACHUSETTS 


77 


amount  of  necessary  investment  in  station  equipment. 
Finally,  it  is  highly  desirable  to  know  the  extent  of  the 
territory  and  the  number  of  inhabitants  served,  the  age 
of  the  plants  compared,  and  whether  or  not  there  is  com- 
petition of  any  kind. 

Without  referring  in  this  connection  to  the  many  com- 
plicated engineering  features  of  the  business,  there  are 
numerous  simple  but  very  important  considerations  which 
should  further  be  borne  in  mind  if  we  wish  the  comparison 
to  be  complete.  We  should  consider  the  proximity  of  the 
generating  plant  to  navigable  waterways  and  to  sources  of 
fuel  supply.  We  should  note  whether  equipment  is  all 
owned  or  partially  leased.  We  should  know  the  topography 
of  the  district  served,  the  location  of  the  central  station, 
and  the  nature  of  the  business  which  is  carried  on  in  the 
municipaUty.  The  traits  and  traditions  of  the  inhabitants, 
the  prevaihng  character  of  the  local  government  and  its 
requirements  regarding  the  placing  of  lines  underground, 
labor  legislation  and  the  unionization  of  labor,  are  all  deter- 
mining factors.  Even  more  important  are  the  nature  of 
the  management,  —  and  "control"  in  the  case  of  private 
plants,  —  the  policy  followed  in  the  matter  of  repairs, 
improvements,  extensions,  and  the  securing  of  new  busi- 
ness. These  considerations,  however,  will  be  reserved  till 
later  in  the  discussion. 

Groups  of  plants  approximately  equal  in  the  six  or  seven 
fundamental  respects  must  first  of  all  be  secured.  The 
municipal  plants  are  the  fixed  quantity  in  the  problem,  as 
all  of  them  are  to  be  studied.  Hence  it  has  been  by  no 
means  a  simple  task  to  select  private  plants  which  will  in 
most  ways  conform  to  the  conditions  outUned.  Since  the 
public  generating  stations  are  for  the  most  part  small,  it 
has  been  rather  difficult  to  find  plants  comparable  in  size. 
The  result  is  that,  with  the  exception  of  two  or  three  very 
small  plants  the  character  of  whose  business  and  whose 
method  of  generating  current  and  keeping  accounts  are 


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IN  MASSACHUSETTS 


81 


Table  15.  Comparative  Averages 

OF  Plants 

I.  Generating  plants: 

Capacity  (K.W.)  of  dynamos 

Output  (K.W.H.) 

Disposal  of  current  (percentage) : 

Commercial  and  domestic  lighting. 

Street  lighting 

'Power 

Other  companies 

V      ,  -    .      r  arithmetical  average . . . 
Load  factors      .  ,^  , 

I  weighted  average 

Customers 

Population  of  district  served 

Area  of  district  served  (sq.  m.) 


Density  of  population. 


Age  of  plants  (years) . 


OF  THE  Two 

liROUPS 

Companies 

Municipal 

(Hdyoke  out) 

1.366  . 

951 

1,764,719 

1,163,110 

90.6 

31.0 

14.3 

24.3 

42.7 

43.8 

12.4 

0.9 

(14)     27.7   . 

(13)    25.5 

(29.2) 

(23.5) 

"     1,377 

1,063 

(1.205)1 

(1,030)1 

16,817 

12,113 

(14,354)1 

(11,768)1 

58.94 

24.81 

(30.67)1 

(21.39)1 

285.3 

488.2 

(468.1)1 

(550.2)1 

25.2 

(18)    22.2 

(18.3)« 

1       t 


Comptmiet  Munieipai 

__    _       -      .         ,  {Norvood  omO 
n.  Purchasmg  plants: 

Output  (K.W.H.) 266,715  157,173 

Disposal  of  current  (percentage) : 

Commercial  and  domestic  lighting.              45.2  54.6 

Street  lighting 21.0  31.3 

Power 81.3  13.9 

Other  companies 2.5  0.8 

Customers 376  289 

Population  of  district  served 5,467  2,679 

'  Area  of  district  served  (sq.  m.) 25 .  06  19.60 

r      (19.88)1 

Density  of  population 218.2  136.7 

Age  of  plants  (years) 15.4  8.0 

(6.5)« 

*  Exduding  fordgn  districts  served.  *  Age  under  public  ownership. 


li 


d2 


MUNICIPAL  ELECTRIC  LIGHTING 


i 


I  i  l':i.. 


such  that  compaxison  is  out  of  the  question,  it  has  become 
necessary  to  choose  the  smallest  and  in  many  cases  the  more 
poorly  managed  companies.  Accordingly,  17  of  these  are 
compared  with  the  18  municipal  plants  which  generated 
all  or  a  portion  of  their  current  diu'ing  the  year  ending 
June  30,  1915.  No  private  plant  so  large  as  Holyoke  has 
been  included,  as  it  is  by  no  means  typical  of  public  plants 
in  the  State.  The  averages  are  usually  computed  both 
with  and  without  Holyoke. 

Two  public  plants  bought  the  greater  part  of  their  cur- 
rent during  the  year,  one  bought  about  half,  and  another 
one  third  of  its  total  output.  To  compare  with  these,  four 
companies  have  been  found  whose  proportion  of  purchased 
current  is  practically  the  same.  One  municipal  plant  uses 
only  oil  for  fuel,  and  two  use  considerable  water  power. 
Among  the  private  plants  selected  there  are  two  very  small 
ones  using  solely  water  power,  two  using  some  water  power, 
and  one  using  a  little  gasoline.  The  two  generating  current 
only  by  water  power  have  been  included  merely  because 
they  are  small.  For  this  reason,  and  inasmuch  as  they  buy 
most  of  their  current,  they  will  not  distort  the  averages  for 
the  group.  For  comparison  with  the  four  public  plants  do- 
ing both  a  gas  and  an  electric  business,  five  similar  com- 
panies have  been  taken,  the  additional  one  simply  because 
it  b  very  small.  Seven  municipal  plants  and  four  private 
ones  sell  some  steam  for  sundry  purposes. 

While  the  output  of  the  17  generating  companies  aver- 
ages somewhat  higher  than  that  of  the  public  stations  (Hol- 
yoke being  excluded),  this  difference  is  probably  not  great 
enough  to  have  any  marked  effect  upon  our  comparisons. 
Whenever  this  fact  may  become  significant  due  allowance 
wiU  be  made  therefor.  So  far  as  the  load  factors  are  con- 
cerned, they  average  about  the  same  for  the  two  groups, 
though  in  several  cases  no  data  are  returned  which  enable 
them  to  be  computed.  With  a  very  few  exceptions,  it  is 
impossible  to  find  the  diversity  factor. 


IN  MASSACHUSETTS 

Some  difficulty  was  encountered  in  looking  for  suffi- 
ciently small  population  groups  in  the  case  of  private 
plants.  This  matter  in  itself  is  not  highly  important;  but 
when  other  conditions  seemed  equal  the  plant  serving  the 
smaller  population  was  selected.  The  question  of  competi- 
tion of  other  central  stations  can  hardly  arise  under  the 
Massachusetts  law.  It  is  interesting  to  note,  however,  that 
all  but  4  of  the  companies  and  all  but  3  of  the  public 
plants  have  a  competing  gas  business  in  their  territory. 
The  17  companies  do  business  in  38  different  cities  and 
towns,  9  of  them  supplying  a  total  of  30  municipalities, 
and  the  18  public  plants  in  only  22.  Geographically,  the 
relative  distribution  of  the  two  groups  of  plants  is  about 
the  same. 

Upon  examination  of  the  ages  of  the  two  groups,  it  ap- 
pears that  16  of  the  companies  and  15  of  the  municipal 
plants  began  operation  before  1900,  and  14  companies  and 
7  municipal  plants  (at  that  time  all  privately  owned  but 
one)  before  1889.  The  average  age  of  the  two  groups  is 
thus  not  far  apart,  but  the  average  length  of  time  under 
municipal  ownership,  18.3  years,  is  nearly  30  per  cent  less 
than  the  average  age  of  the  companies,  25.2  years.  Ac- 
cording to  the  census  of  1910,^  10  of  the  cities  and  towns 
in  which  the  companies  are  located,  having  a  population 
greater  than  10,000,  did  a  considerable  amount  of  manu- 
facturing. Though  only  6  of  the  municipalities  having  their 
own  plants  were  five  years  ago  in  this  population  group, 
they  all  did  a  large  manufacturing  business,  4  of  them 
ranking  much  higher  than  the  places  served  by  private 
plants.  At  least  3  more  municipalities  should  be  added 
for  1915.*  The  total  for  the  two  groups  thus  becomes 
practically  the  same.  Finally,  voluntary  associations  or 
groups  of  investors  control  14  of  the  companies.* 

^  Abstract,  U.S.  Census,  1910  (with  Supplement  for  Massachusetts) : 
648;  also  Mass.  Stat.  Mfg.,  1914: 12-47. 

2  Mass.  Stat.  Mfg.,  1914: 12-47.       3  cf.  Mass.  G.  &  E..  xxxi:  12-13. 


MUNICIPAL  ELECTRIC  LIGHTING 

As  several  of  the  21  municipal  plants  purchasing  their 
current  do  so  minute  a  business,  it  was  scarcely  possible 
to  find  a  sufficient  number  of  very  small  companies  to 
compare  with  them.  However,  16  were  selected,  although 
two  or  three  of  the  smallest  companies  had  to  be  eliminated 
because  of  the  fact  that  the  records  which  they  keep  are 
unsatisfactory.  Otherwise,  as  in  the  case  of  the  gener- 
ating plants,  the  least  and  most  inefficierU  private  business 
has  been  compared  with  public  business  as  it  is. 

When  only  a  distributing  system  is  operated,  the  prob- 
lem of  comparison  is  much  simplified.  The  average  output, 
very  small  in  either  group,  is  nearly  enough  the  same  to 
make  comparisons  valid.  Load  factors  cannot  be  com- 
pared, because  with  two  or  three  exceptions  pubHc  plants 
return  no  data  on  this  point;  but  all  in  each  group  except 
one  give  both  day  and  night  service.  The  16  companies 
do  business  in  22  different  towns,  while  the  municipaUties 
confine  their  business  to  their  own  limits.  It  is  rather  sur- 
prising to  find  10  of  the  municipal  and  5  of  the  private 
plants  in  Worcester  County.  Also,  14  of  the  companies 
are  controlled  by  voluntary  associations.^ 

The  average  population  served  by  the  private  plants  is 
approximately  double  that  served  by  the  municipalities. 
There  is  gas  competition  in  the  case  of  10  of  the  companies 
and  8  of  the  mimicipalities.  Three  of  the  former.  Black- 
stone,  Spencer,  and  Williamstown,  do  a  Uttle  gas  business 
themselves.  The  average  age  of  the  municipal  purchasing 
plants  is  considerably  less  than  that  of  the  companies. 
Of  the  latter,  12  began  operation  before  1905,  while  only 
5  of  the  public  plants,  2  of  which  were  then  imder  pri- 
vate ownership,  were  operating  before  this  date.  It  must 
also  be  noted  that  11  of  the  companies,  nearly  70  per  cent, 
formeriy  generated  current,  6  ceasing  to  do  so  in  1914. 
Only  2  of  the  21  municipal  plants  ever  produced  current, 
and  that  was  when  they  were  privately  owned.  Finally, 
»  Cf.  Mass.  G.  &  E.,  xxxi:  12-13,  and  3a-32a. 


r 


IN  MASSACHUSETTS 

since  Norwood  occupies  the  same  relation  with  respect  to 
this  group  of  public  plants  that  Holyoke  occupies  with 
respect  to  the  other  group,  —  doing  one  third  of  the  aggre- 
gate business,  —  it  has  been  kept  separate  in  computing 
the  averages,  and  for  the  reasons  already  given  no  corre- 
spondingly large  company  has  been  selected. 

The  fiscal  year  1914-15  has  been  taken  for  the  more 
intensive  study  of  the  subject  because,  when  the  work  was 
begun,  no  later  returns  were  available.  As  this  is  a  census 
year  in  Massachusetts,  it  is  convenient  for  our  piu*poses. 
On  the  other  hand,  due  to  certain  abnormal  market  con- 
ditions resulting  from  the  European  war  as  well  as  to  un- 
expected contingencies,  some  of  the  records  for  this  date 
may  not  be  fairly  representative.  In  most  instances  any 
individual  differences  will  be  minimized  in  the  averages, 
and  group  differences  would  tend  to  be  the  same  in  the  two 
cases.  Yet,  in  order  to  present  the  subject  with  as  much 
acciu-acy  as  may  be  attained,  single  items  are,  in  doubtful 
cases,  traced  back  over  a  period  of  years.  Fiui:hermore,  so 
that  the  investigation  may  be  still  more  conclusive,  the 
year  1909-10  has  also  been  selected  for  careful  study  of 
all  plants  generating  current.  Accordingly,  the  relative 
changes  which  have  taken  place  in  the  five-year  period  will, 
whenever  possible,  be  pointed  out.  Before  this  date,  par- 
ticularly for  the  public  plants,  a  good  deal  of  the  data  re- 
turned are  of  such  a  nature  that  they  can  only  with  the 
greatest  difficulty  be  utilized.  This  five-year  comparison 
is  not  at  present  attempted  in  dealing  with  the  purchasing 
plants,  for  almost  half  of  the  companies  chosen  were  still 
generating  current  in  1910,  and  only  9  of  the  21  municipal 
plants  were  then  in  operation,  most  of  them  not  yet  "sea- 
soned." Under  these  circumstances,  such  a  comparison 
would  lead  to  no  definite  results. 

An  attempt  will  be  made  to  study  the  subject  in  its 
physical,  financial,  and  developmental  aspects.  Attention 
will  be  given  to  as  many  of  the  engineering  features  as  seem 


•f  MUNICIPAL  ELECTRIC  LIGHTING 

necessary  for  our  purpose,  to  the  technical,  statistical,  and 
historical  aspects  of  the  problem,  as  well  as  to  certain  ques- 
tions of  accounting.  But  theoretical  questions  will  fre- 
quently be  raised,  practical  considerations  will  be  con- 
stantly stressed,  and  matters  of  public  policy  will  not  be 
overlooked.  As  nearly  as  may  be,  only  really  comparable 
data  will  be  compared.  Disturbing  differences  will  if  pos- 
sible be  eliminated,  or,  in  lieu  of  this,  reasonable  allowances 
will  be  made.  While  eschewing  the  futile  quibbles  fre- 
quently indulged  in  by  narrowly  trained  accountants  and 
by  over-specialized  engineers,  the  writer  hopes  to  avoid 
the  even  more  serious  dangers  of  ill-considered  and  super- 
ficial generalization  which  have  characterized  most  studies 
of  the  problem  of  municipal  ownership.  The  reader  will 
have  to  be  the  judge  of  the  fairness  of  the  methods 
followed. 

Finally,  due  weight  will  be  given  to  the  numerous  "in- 
tangible items"  which  no  returns  can  show,  but  which 
are  highly  significant  in  any  investigation  of  the  problem 
of  public  ownership.  Of  much  greater  importance,  how- 
ever, the  local  background  will  be  carefully  studied,  so  that 
the  conclusions  reached  by  means  of  an  impartial  analysis 
of  all  available  statistical  material,  will  be  checked  and 
supplemented  and  clothed  with  some  degree  of  life,  as  a 
result  of  a  reasonably  thorough  first-hand  knowledge  of 
the  situation,  secured  through  a  local,  personal  survey  of 
the  plants  under  consideration.  The  results  arrived  at  by 
these  different  methods  should  at  least  enable  us  to  form 
some  satisfactory  judgments  on  certain  aspects  of  the  prob- 
lem of  municipal  ownership,  and  may,  perchance,  furnish 
us  with  some  clue  to  the  possibilities  of  public  industry  on 
a  more  extensive  scale. 

In  conclusion,  attention  should  again  be  called  to  the 
fact  that  existing  circumstances  have  made  it  necessary 
to  compare  public  business  as  we  find  it  with  private  busi- 
ness in  many  cases  at  its  worst  in  the  State.  Consequently, 


IN  MASSACHUSETTS 


87 


if  municipal  ownership  shall  appear  to  hold  its  own,  the 
reader  can  rest  assured  that  it  has  been  given  the  benefit 
of  any  doubt  which  might  arise;  and  if  the  results  are 
found  to  be  unfavorable,  the  case  against  municipalization 
as  a  general  policy  will  be  thereby  the  stronger. 


II 


I ' 


tif 


I 


CHAPTER  IV 

^"physical  statistics,  analyses,  and  comparisons 

While  it  is  not  the  purpose  of  the  writer,  in  this  study, 
to  deal  with  the  many  intricacies  of  electrical  engineering, 
yet  it  is  necessary  to  know  generally  how  the  selected 
groups  of  public  and  private  plants  compare  with  respect 
to  their  physical  equipment,  development,  and  operation, 
before  we  can  be  in  a  position  to  interpret  correctly  the 
numerous  financial  data  which  must  be  considered  in  an 
investigation  of  this  kind.  Accordingly,  we  shall  begin 
with  the  stations  themselves,  studying,  at  this  stage,  only 
the  generating  plants.^ 

*  The  present  chapter,  for  the  most  part,  naturally  deals  with  the  gen- 
erating plants.  Unless  necessary  for  the  sake  of  clearness,  data  given  at 
length  in  the  appendix  will  not  be  tabulated  in  brief  in  the  text.  The 
plants  doing  both  a  gas  and  electric  light  business  have  been  kept  sep- 
arate from  the  purely  electric  plants,  and  whenever  occasion  seems  to 
denuindy  attention  will  be  called  to  any  abnormalities  which  they  may 
present.  Except  when  so  indicated,  Holyoke  is  not  included  with  the 
public  plants  when  totals  are  given  and  comparisons  made;  the  reasons 
for  this  omission  are  self-evident. 

Finally  the  reader  must  be  mindful  of  the  fact  that  all  of  the  data 
herein  presented  have  been  worked  over  by  the  writer  from  many  angles 
before  they  have  reached  their  present  form.  The  returns  themselves 
give  no  totals,  make  no  analyses,  work  out  no  relations,  and  much 
highly  important  information  is  conspicuous  by  reason  of  its  absence. 
In  many  instances  it  has  been  necessary  to  ferret  out  valuable  material 
jfrom  various  state  bureaus.  The  work  has  further  been  very  much  com- 
pUcated  by  including  the  year  1910  in  the  study,  and  the  labor  of  com- 
putation and  presentation  has  thereby  been  increased  many  fold.  Fre- 
quently, also,  when  the  returns  of  1910  proved  unsatisfactory  in  certain 
points,  it  has  been  necessary  to  use  the  data  given  in  the  succeeding  re- 
turns instead.  These  irregularities  call  for  the  utmost  care  in  computing 
the  averages  so  that  the  case  will  be  truly  presented.  In  view  of  these 
difficulties,  it  would  indeed  be  surprising  if  many  errors  have  not  crept 
into  the  calculations  herewith  appended.  The  writer  is  confident,  how- 
ever, that  these  errors  are  not  of  such  a  character  that  they  will  in  any 
respect  invalidate  the  general  reasoning  developed  in  this  study. 


^  MUNICIPAL  ELECTRIC  LIGHTING 


89 


4 


1.  Station  Equipment  * 

At  the  present  time  (1915)  the  total  number  of  boilers 
in  the  15  reporting  municipal  plants  (47)  is  about  72  per 
cent  of  the  total  for  the  16  private  plants  reporting  this 
item  (65),  while  the  total  horse  power  of  their  boilers 
(8,353)  is  about  60  per  cent  of  that  of  the  latter  (13,874). 
Hence  the  average  size  of  boilers  is  20  per  cent  greater  in 
the  companies  than  in  the  public  plants  (213  H.P.  vs,  178 
H.P.)^  The  average  number  of  boilers  per  public  plant  is 
three  fourths  of  the  average  number  found  in  the  private 
plants  (3.1  vs.  4.1).  It  is  significant  to  note  that  the  rela- 
tive average  capacity  of  boilers  has  remained  almost  con- 
stant during  the  past  five  years,  the  rate  of  increase  having 
been  practically  equal  in  the  two  cases,  so  that  the  abso- 
lute difference  has  been  left  the  same.  However,  though 
the  absolute  figures  are  ridiculously  small,  9  and  2  respec- 
tively, the  number  of  units  has  increased  much  more  rap- 
idly for  the  private  plants,  leading  to  a  correspondingly 
more  rapid  growth  of  boiler  capacity  per  plant  for  the 
period,  until  now  the  average  capacity  of  the  municipal 
plants  is  only  64  per  cent  of  the  average  for  the  companies 
whereas  in  1910  it  was  71  per  cent. 

One  public  plant,  Mansfield,  uses  oil  engines,  and  another, 
Merrimac,  rents  its  steam  station  from  the  town  water- 
works and  reports  no  boilers.  A  third  plant,  Middlebor- 
ough,  does  practically  all  of  its  generating  by  gas  engines 
and  by  water  wheels,  and  consequently  reports  an  abnor- 
mally low  boiler  capacity  (25  H.P.).  One  company,  Win- 
chendon,  has  never  used  any  motive  power  but  water,  and 
two  others.  Great  Barrington  and  Lee,  have  always  gen- 
erated largely  by  means  of  water  wheels.  For  some  time 
they  have  all  bought  a  large  portion  of  their  current.  Hence 
these  plants  report  a  disproportionately  small  amount  of 

1  Appendix,  pp.  394-395. 

*  Unless  other  explanation  is  given,  the  averages  used  throughout  are  fully 
weighted  arithmetical  or  "group"  averages.    Cf.  Appendix,  p.  391. 


90 


MUNICIPAL  ELECTRIC  LIGHTING 


horse  power.  The  conditions  for  the  two  groups  are  rela- 
tively the  same  in  this  regard. 

Upon  further  analysis,  it  appears  that  the  total  rated 
horse  power  of  one  of  the  companies  has  decreased  very 
slightly,  and  three  have  remained  unchanged  during  the 
five-year  period.  Hence  75  per  cent  of  this  group  have 
gained  in  boiler  capacity  during  the  period.  On  the  other 
hand,  3  of  the  municipal  plants  show  a  clearly  marked 
decrease  in  rated  horse  power,  while  5  remain  unchanged. 
Of  these  8  plants,  2  bought  nearly  all  of  their  current 
during  the  year.  Expressed  in  other  words,  more  than  53 
per  cent  of  the  public  plants  have  remained  stationary  or 
have  gone  back  so  far  as  their  total  boiler  capacity  is 
concerned.  Furthermore,  exactly  60  per  cent  of  the  total 
increase  in  rated  horse  power  for  all  of  the  municipal 
plants  (1100  H.P.  out  of  1841  H.P.)  is  accounted  for  by 
the  one  large  plant  of  Taunton.  If  Holyoke  is  included,  the 
averages  for  the  two  groups  become  practically  identical. 

The  total  horse  power  of  prime  movers  for  the  pubUc 
plants  is  equal  to  70  per  cent  of  that  for  the  companies, 
though  the  actual  number  of  their  units  is  nearly  90  per 
cent  of  the  latter.  The  average  horse  power  of  the  primary 
power  machines  is  more  than  one  fifth  less  in  the  case  of 
the  public  plants  than  in  the  private  plants.  The  rate  of 
increase,  both  in  numbers  and  in  total  horse  power,  has 
been  almost  identical  in  the  two  groups.  However,  6  of 
the  municipal  plants  have  shown  no  growth  in  this  regard 
during  the  five-year  period,  and  one  has  shown  an  actual 
decrease  in  horse  power.  Of  the  companies,  3  have  re- 
mained stationary  and  2  have  decreased  slightly. 

Table  16  indicates  clearly  the  relation  which  the  differ- 
ent kinds  of  prime  movers  bear  to  each  other.  It  appears 
that  the  number  of  steam  turbines  is  considerably  greater 
in  the  private  plants  and  that  their  average  horse  power 
is  less.  If,  however,  the  two  large  turbines  of  the  municipal 
plant  of  Taunton  (2,300  H.P.  each)  be  omitted,  the  aver- 


IN  MASSACHUSETTS 


91 


Table  16.  Character  of  Prime  Movers 


Companies 

Municipalities 

Average  H.P. 

Tin» 

NuTober 

Horse 
power 

Number 

Horse 
povoer 

Com- 
panies 

Munici- 
palities 

Steam  engines 

Steam  turbines 

All  others » 

37 
16 

11 

17,958 
11,750 

1,269 

38 
10 

9 

10,459 
10,008 

935 

485 
734 

115 

275 
1,001 
(676) » 
104 

Total 

64 

30.977 

57* 

21,402 

484 

376 

*  This  includes,  for  the  companies,  8  water  wheels  and  3  gasoline  engines;  and,  for  the 
municipalities,  i  water  turbines,  4  oil  en^nes,  and  S  gas  engines. 
«  Wakefield  omitted;  ceased  making  current.  •  Taunton  omitted. 

ages  are  not  far  apart.  The  average  horse  power  of  steam 
engines  of  the  companies  is  about  75  per  cent  greater  than 
that  of  the  pubHc  plants. 

For  the  general  student  of  the  problem,  the  kilowatt 
capacity  of  dynamos  is  of  more  significance  than  the  horse 
power  of  boilers  and  prime  movers.  In  1915  the  total 
rated  kilowatt  capacity  of  generators  of  the  17  municipal 
plants  was  30  per  cent  less  than  that  of  the  corresponding 
number  of  companies,  the  number  of  dynamos  was  20  per 
cent  less,  and  the  average  capacity  per  dynamo  was  nearly 
15  per  cent  less.^  Practically  all  of  the  generators  were  of 
the  alternating  current  type,  less  than  2  per  cent  in  either 
case  being  represented  by  direct  current  units.* 

*  The  accuracy  of  the  returns  in  the  matter  of  rated  kilowatt  capacity 
of  dynamos  is  frequently  open  to  question.  Upon  careful  examination 
of  the  data,  when  available,  the  writer  has  found  that  the  capacity  is 
sometimes  returned  in  kilovolt-amperes  instead  of  kilowatts,  as  called 
for  in  the  returns.  But,  unless  the  power  factor  should  be  unity  —  a  con- 
dition not  found  in  the  smaller  plants  —  the  former  rating  would  be  too 
high,  depending  upon  individual  conditions.  As  the  data  are  by  no 
means  satisfactory  on  this  point,  and  as  the  errors  would  probably  be 
about  equally  divided  between  the  two  groups,  the  writer  has  adhered 
to  the  rating  as  given  in  the  returns. 

'  It  is  interesting  to  note  that  alternating  current  generation  has 
constantly  been  displacing  the  earlier  direct  current  generation.  This  is 
due  largely  to  the  greater  economy  and  convenience  in  distribution  which 


'  ( 


n 


MUNICIPAL  ELECTRIC  LIGHTING 


The  development  between  1910  and  1915  presents  some 
interesting  contrasts.  In  the  first  place,  the  total  number 
of  dynamos  decreased  nearly  8  per  cent  in  the  public 
plants  and  24  per  cent  in  the  companies.  The  total  kilo- 
watt capacity  increased  43  per  cent  in  the  former  and  52 
per  cent  in  the  latter;  while  the  average  kilowatt  capacity 
per  dynamo  increased  nearly  55  per  cent  in  the  municipal 
plants  and  100  per  cent  in  the  group  of  private  plants. 
These  figures  indicate  that  the  companies  have  increased 
their  absolute  capacity  more  rapidly  than  have  the  mimi- 
cipalities,  and  that,  while  they  had  a  disproportionately 
large  number  of  very  small  D.C.  generators  in  1910,  these 
have  been  almost  wholly  displaced  by  the  installation  of  a 
small  number  of  large  A.C.  dynamos.  For  both  of  these 
reasons  we  would  expect  a  considerable  increase  in  station 
investment  for  the  companies  during  this  period. 

The  number  of  small  arc  light  and  power  generators 
was,  in  1910,  almost  negUgible  in  the  case  of  the  municipal 
plants,  probably  due  to  the  fact  that,  in  most  instances, 
their  equipment  was  of  more  recent  installation  than  that 
of  the  companies.  On  this  point  it  will  be  recalled  that  all 
of  the  older  public  plants  were  taken  over  from  private 
ownership,  and  when  the  transfer  was  effected  a  good  deal 
of  the  old  equipment  was  scrapj)ed.  The  large  number  of 
these  out-of-date  generators  retiu^ed  by  the  companies 
at  this  date  reduces  their  average  capacity  per  dynamo 
to  only  158  kilowatts,  or  about  9  per  cent  less  than  that 
of  the  public  plants.  In  1915,  the  public  plants  returned 
4  D.C.  generators  with  a  total  capacity  of  298  kilowatts, 
and  the  private  plants  report  10  of  these,  having  a  total 

characterizes  the  alternating  current,  since  it  can  be  transmitted  over 
long  distances  at  a  high  voltage  and  a  low  amperage,  thus  occasioning  the 
minimum  line  losses.  Furthermore,  this  current  can  be  "stepped  down'* 
or  "up,"  if  need  be,  by  means  of  transformers,  so  that  it  becomes  avail- 
able for  practically  every  kind  of  light  and  power  service.  Direct  current, 
on  the  other  hand,  camiot  be  "transformed,"  and  is  subject  to  great  loss 
in  distribution. 


IN  MASSACHUSETTS 


93 


capacity  of  436  kilowatts.  Were  these  small  generators 
omitted  in  both  groups,  the  average  capacity  per  A.C. 
dynamo  would  be  21  per  cent  less  for  the  municipal  plants 
than  for  the  companies  (283  K.W.  vs,  356  K.W.).  Finally, 
4  of  the  public  plants  report  no  increase  in  capacity  dur- 
ing the  period  and  2  have  had  a  decrease,  while  3  com- 
panies show  a  decrease  and  one  has  remained  unchanged. 
As  Holyoke  increased  its  capacity  by  more  than  50  per 
cent  during  the  year,  the  inclusion  of  its  figures  would  be 

misleading. 

In  this  connection  attention  should  be  called  to  the 
correspondence  which  exists  between  the  relative  average 
capacities  of  boilers,  prime  movers,  and  generators  in  the 
two  groups.  Reducing  kilowatts  to  horse  power  when 
necessary,  we  find  that  the  relations  are  as  follows:  — 

Table  17.  Relations  existing  between  the  Station  Units 


Um 


Average  capacity  of  units  (H.P.) . 

Companies 

Municipalities 


Ratio 

Companies 


BoUer»\ 


867 
5951 


1.0 


Municipalities 10 


Prime 
moteT$ 


1,822 
1,274 


2.10 
2.14 


Dynamos 


1,830  ?^ 
1,274  J 


2.11 
2.14 


1  Mlddleborough  omitted. 

These  data  suggest  that  the  engineering  conditions  for 
the  two  groups  of  plants,  so  far  as  can  be  ascertained  from 
the  returns,  are  almost  identical.  Having  examined  the 
date  of  installation  of  the  various  units,  however,  the  writer 
finds  that  their  average  age  is  7.6  years  for  the  companies 
and  9.1,  or  20  per  cent  greater,  for  the  municipalities.  Ten- 
tatively,  then,  we  may  conclude  that  the  private  plants  have 
been  kept  in  better  repair  than  the  municipal  plants.  On  the 
other  hand,  some  may  argue  that  the  equipment  of  public 


I 


MUNiaPAL  ELECTRIC  LIGHTING 

plants  has  been  so  well  maintained  that  it  has  not  needed 
as  frequent  replacement  as  that  of  the  companies.  This 
view  seems  hardly  consistent  with  the  facts  as  we  know 
them,  and  the  local  survey  has  amply  proved  the  truth  of 
our  tentative  conclusion. 

Further  analysis  reveals  the  fact  that  the  per  capita  rat- 
ing of  the  stations  has  increased  with  equal  rapidity  in  the 
two  groups  during  the  past  five  years,  from  63  watts  to 
83  watts  for  the  pubhc  and  from  61  watts  to  81  watts  for 
the  private  plants.  The  rating  per  customer,  on  the  other 
hand,  has  decreased  in  a  fairly  equal  ratio,  26  per  cent  in 
the  case  of  the  public  plants  and  less  than  23  per  cent  for 
the  companies.   Hence,  it  is  apparent  that,  while  the  two 
sets  of  plants  have  outstripped  the  population  in  their 
growth  of  generating  capacity,  they  have  by  no  means 
kept  pace  with  the  increase  in  number  of  customers.  This 
fact  probably  indicates,  for  the  most  part,  an  improved 
diversity  factor,  and  incidentally  a  better  load  factor,  so 
that  a  given  amount  of  generating  equipment  can  render 
proportionately  greater  service.  This,  again,  suggests  that 
a  number  of  small  "off  peak"  customers,  using  current  for 
power,  cooking,  heating,  etc.,  have  been  secured.    And, 
finally,  the  fact  that  the  per  customer  rating  of  municipal 
plants  has  decreased  somewhat  more  rapidly  than  that  of 
the  companies,  may  indicate  that  the  former  have  avoided 
the  poorer  business,  and  have  endeavored  to  extend  their 
service  only  to  the  more  desirable  class  of  customers.   In 
other  words,  municipal  plants  have  doubtless  been  less 
active  in  going  after  new  business  than  have  the  private 
plants.  In  many  cases  they  have  probably  waited  for  the 
trade  to  develop  instead  of  aiding  in  that  development. 
On  the  other  hand,  the  difference  can  largely  be  accounted 
for  by  the  growth  in  power  business  of  the  public  plants. 
Though  these  figures  in  themselves  are  far  from  conclusive, 
there  will  be  occasion  later  to  refer  to  this  matter  in  other 
connections. 


IN  MASSACHUSETTS  9S 

* 

2.  Fuel  Consumption  * 

While  15  of  the  municipal  plants  using  only  coal  for 
generation  consume  on  the  average  4.69  pounds  of  coal  per 
kilowatt  hour  generated,  12  of  the  companies  use  exactly 
4  pounds  per  kilowatt.  A  small  amount  of  coke  and  screen- 
ings is  used  by  both  groups,  and  the  quality  and  price  in 
individual  cases  vary  widely.  With  so  large  a  number, 
however,  the  average  conditions  are  about  the  same.  The 
advantage  which  the  companies  seem  to  have  is  due  par- 
tially to  the  economies  arising  from  the  generation  of  a 
larger  amoimt  of  current  per  plant  (1,650,091  kilowatt 
hours  as  compared  with  1,024,023  kilowatt  hours  gene- 
rated by  the  public  plants),  and  partially  to  the  somewhat 
better  load  factor.  How  much  of  the  difference  is  due  to 
Other  causes,  such  as  more  efficient  engineering  and  better 
quality  of  coal,  can  only  be  guessed  at.  The  writer  should 
state,  however,  that  the  local  survey  has  disclosed  the 
fact  that  the  companies,  as  one  might  expect,  are  in  the 
main  better  supplied  with  the  various  economic  devices, 
automatic  stokers,  carbon  dioxide  recorders,  economizers, 
etc.,  which  help  to  conserve  the  fuel  supply. 

Expressed  in  other  words,  the  number  of  watt  hours 
generated  per  pound  of  coal  averages  213  in  the  pubUc 
plants  and  250  in  the  companies,  a  difference  of  37,  or  17.5 
per  cent.  A  study  of  the  accompanying  chart,  however, 
persuades  the  writer  that  the  difference  is  not  much  greater 
than  might  normally  be  expected  as  a  result  of  disparity 
in  the  quantity  of  current  generated.  While  the  graph  of 
the  pubhc  plants  shows  a  surprising  irregularity  for  plants 
between  600,000  and  1,000,000,  this  is  caused  almost  wholly 
by  two  exceptional  cases,  and  after  the  1,000,000  mark  is 
reached,  we  have  a  delightfully  smooth  curve,  slowly 
ascending  to  the  right.  On  the  other  hand,  the  graph  of 
the  companies  appears  very  even  up  to  1,000,000,  due  to 

*  Appendix,  pp.  440-441. 


) 


98  MUNICIPAL  ELECTRIC  UGHTING 

the  fact  that  the  number  of  plants  in  this  class  is  very 
small,  only  3  as  contrasted  with  10  of  the  public  plants. 
After  the  1,000,000  point,  it  zigzags  about  the  first  graph, 
constantly  approaching  it  as  a  norm.  For  plants  generat- 
ing slightly  more  than  1,000,000  kilowatt  hours,  the  Unes 
meet  at  a  point  mdicating  that  not  much  more  than  200 
watt  hours  are  produced  per  pound  of  coal.  They  again 
come  close  together  near  the  2,000,000  mark,  at  a  point 
somewhat  under  250.   When  the  extremes  of  the  private 
plants  are  averaged,  they  approach  surprisingly  near  the 
more  even  graph  of  the  pubhc  plants.  It  is  scarcely  neces- 
sary for  our  purposes  to  attempt  to  explain  the  several 
individual   irregularities  when  the   averages   so  closely 
approximate  each  other.  In  a  number  of  cases,  however, 
they  are  caused  by  a  difference  in  the  fuel  value  of  the  coal 
used.   Hence,  this  chart  should  be  studied  in  connection 
with  a  later  one  showing  the  unit  costs  of  coal. 

It  is  worth  noting  that  the  same  group  of  private  plants, 
while  increasing  their  average  output  more  than  50  per 
cent  during  the  five-year  period  (from  less  than  1,300,000 
to  ahnost  2,000,000  K.W.H.),  reduced  the  amount  of  coal 
consumed  per  kilowatt  hour  by  about  10  per  cent  (from 
4.434  pounds  to  4  pounds).    The  municipal  plants  like- 
wise increased  their  output  almost  50  per  cent  (from  686,- 
000  to  more  than  1,000,000  K.W.H.),  and  decreased  the 
quantity  of  coal  used  from  6.356  to  4.69  pounds  per  kilo- 
watt hour  generated,  or  about  26  per  cent.   The  relative 
size  of  the  two  groups  of  plants  accounts  largely  for  the 
greater  decrease  in  coal  consumption  in  the  case  of  the 
municipal  plants,  though  it  seems  probable  that  the  gener- 
ating efficiency  of  the  latter  was  unnecessarily  low  in  1910. 

3.  Output  AND  Disposal  OF  Current  * 

In  1915,  the  average  output  of  the  17  municipal  plants, 
including  current  purchased   as  well  as  generated,  was 
./  Appendix,  pp.  396-40S,  406-407,  422. 


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IN  MASSACHUSETTS 


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1,163,110  kilowatt  hours.  The  average  output  of  the  com- 
panies was  about  52  per  cent  greater,  or  1,764,719  kilowatt 
hours.  In  1910,  however,  the  companies  led  by  67.5  per 
cent,  the  averages  being  respectively  658,488  and  1,103,075 
kilowatt  hours.  The  public  plants  piu*chased  12  per^cent 
of  their  current,  and  the  other  group  6.5  per  cent,  while  in 
1910  the  respective  amounts  purchased  were  1.3  per  cent 
and  4.1  per  cent. 

Due  to  the  way  in  which  the  records  are  kept,  it  has 
been  diflBcult  to  get  the  load  factors  of  the  plants  studied. 
Only  two  or  three  of  the  plants  return  a  load  curve,  and 
none  of  them  work  out  their  load  factors,  as  this  is  not 
required  by  the  Board.  Hence,  the  data  with  which  one  has 
to  deal  are  very  irregular.  Three  companies  and  three 
public  plants  report  only  the  maximum  day's  output  in 
kilowatt  hours.  One  company  and  three  public  plants 
report  the  maximum  demand  in  amperes  instead  of  in 
kilowatts,  giving  no  station  voltage;  while  one  public  plant 
gives  no  data  whatever  bearing  on  this  point.  Accordingly, 
three  of  the  companies  and  four  of  the  municipalities  must 
be  disregarded  in  this  portion  of  the  study.  However,  the 
voltage  of  the  plants  reporting  in  amperes  was  ascertained 
and  the  load  factors  roughly  computed  accordingly.^  The 
arithmetical  average  of  the  load  factors  of  the  14  plants 
in  each  group  is,  for  the  companies,  27.2,  and  for  the  muni- 
cipalities, 25.9.2  if^  however,  Holyoke  be  omitted,  the  lat- 

*  These  voltages  are,  for  the 'public  plants,  Hudson,  1,100,  Reading, 
2,300,  Middleborough,  1,100,  and  for  the  one  company.  Vineyard  Lighting 
Co.,  2,300.  As  the  power  factor  is  unknown,  these  load  factors  are  little 
more  than  estimates. 

'  The  load  factor  here  used  is  the  standard  one,  being  simply  the 
ratio  of  average  to  inflYiTniiTn  demand  for  the  year.  The  formula  for 
computation  is 


load  factor  = 


yearly  output 


peak  load  X  8760  (no.  hours  in  yr.) 


The  returns  do  not  show  the  length  of  the  peak  load,  but  it  is  doubt- 
less approidmately  the  some  for  the  two  groups. 


;i^: 


MUNICIPAL  ELECTRIC  LIGHTING 

ter  becomes  25.5.  The  weighted  averages,  which  probably 
more  nearly  indicate  the  true  relation,  are  29.2  for  the 
companies  and  only  23.5  for  the  mmiicipalities.  This,  of 
course,  shows  that,  other  conditions  being  equal,  the  com- 
panies are  being  operated  more  eflSciently  than  the  public 
plants,  in  that  their  investment  is  working  for  them  a  cor- 
respondingly greater  portion  of  the  time. 

The  maximum  demand  factors  are,  for  the  companies, 
49.4,  and  for  the  public  plants,  62.9.  ^  These  figures  may 
show  that  the  latter  are  following  a  more  conservative 
poHcy  than  the  former  with  respect  to  the  enlargement  of 
their  generating  capacity.  This  disparity  is  somewhat  in- 
creased by  the  fact  that  the  public  plants  are  buying  pro- 
portionately more  of  their  current  than  the  companies, 
and  hence  actually  need  a  correspondingly  smaller  amount 
of  dynamo  capacity;  but  this  is  sufficient  to  account  for 
only  a  small  part  of  the  difference.' 

The  average  daily  amount  of  current  generated  by  the 
group  of  municipal  plants  in  1910  was  30,269  kilowatt 
hours,  and  47,700  hours  in  1915.  At  the  same  dates  the 
daily  averages  for  the  companies  were  49,245  and  76,854 
kilowatt  hours.  Also,  the  total  kilowatt  capacity  of  gen- 
erators was,  for  the  municipal  plants,  11,297  and  16,166 
in  the  respective  years,  and  for  the  companies  15,281  and 
23,221.  Studying  these  data,  we  find  that  m  1910  the 
public  plants  actually  produced  only  11.1  per  cent  of  the 
total  current  which  with  theu*  equipment  they  couM  have 
produced.  In  other  words,  their  output  (purchased  cur- 
rent deducted)  was  on  the  basis  of  about  two  and  two 

1  The  marimum  demand  factor  used  by  the  writer  is  the  ratio  of  the 
peak  load  for  the  year  to  the  total  rated  capacity  of  the  generators.  In 
this  case,  of  course,  arithmetical  averages  are  used. 

*  Unfortunately  we  know  nothing  definite  about  the  dwersiiy  factor  — 
the  ratio  between  the  sum  of  the  individual  Tnaxima,  and  the  maximum 
of  the  system  —-  for  these  small  plants.  It  may  be  observed  in  passing, 
however,  that  the  more  the  diversity  factor  exceeds  unity,  the  greater  is 
the  number  of  customers  which  can  be  served  by  means  of  a  given  gen- 
eratioig  capacity. 


Ill 


IN  MASSACHUSETTS 


99 


thirds  hours*  use  per  day  of  the  maximum  capacity.  The 
companies  showed  only  a  slightly  better  figure,  13.4  per 
cent,  or  three  and  one  fifth  hours'  use  per  day  of  theu-  maxi- 
mum generating  capacity.  In  1915  conditions  had  changed 
but  slightly.  The  municipahties  had  increased  then-  per- 
centage of  possible  output  to  12.3,  or  three  hours'  use  of 
their  maximum,  and  the  companies  had  crept  along  to  13.8 
per  cent,  equivalent  to  three  and  one  third  hours'  use.  This 
analysis  indicates  a  rather  excessive  amount  of  idle  invest- 
ment in  generating  plants,  but  the  conditions  are  very 
similar  in  the  two  groups. 

The  average  output  per  day  for  each  plant  stands  at 
4,835  kilowatt  hours  for  the  companies  and  3,187  for  the 
municipalities.  The  ratios  of  the  average  loaxl,  purchased 
current  being  deducted,  to  the  average  rated  station  capac- 
ity, are  respectively  30.2  per  cent  and  33.9  per  cent.  The 
yearly  amount  of  current  generated  per  kilowatt  capacity 
of  dynamos  is  1,207  kilowatt  hours  for  the  companies  and 
1,077  for  the  other  group,  while  in  1910  it  was  1,176  and 
978  respectively.  With  a  better  load  factor  on  the  part  of 
the  former  and  with  some  dynamos  practicaUy  out  of  use 
in  the  latter,  these  figures  are  to  be  expected.  Finally,  the 
ratio  of  the  maximum  load  on  the  day  of  least  output  to 
the  maximum  station  load,  is,  for  the  public  plants,  27  per 
cent,  and  for  the  companies,  26.  This  is  an  unusuaUy  close 
correspondence,  which  in  turn  suggests  that  the  condi- 
tions of  business  in  the  two  groups  are  very  similar. 

These  figures,  however,  as  well  as  most  of  the  other  data 
dealing  with  the  load,  should  be  taken  with  a  good  deal  of 
caution,  for  it  is  by  no  means  certain  that  the  returns  are 
correct  in  this  regard.  This  is  particularly  true  of  the 
smaller  public  plants,  whose  station  meters  have  sometunes 
not  been  tested  for  years.^  One  public  plant,  Ipswich,  and 
one  company.  Buzzard's  Bay,  note  in  the  returns  that  they 
have  for  the  most  part  estimated  their  output  of  current, 

1  Cf.  ch.  XI,  pp.  301-302. 


Il 


(         t 


100 


MUNICIPAL  ELECTRIC  LIGHTING 


Probably  some  others  have  done  a  good  deal  of  estimating 
without  mentioning  the  fact.  Prima  facie  the  writer  would 
expect  these  conditions  to  be  worse  in  the  case  of  the 
public  plants,  since  they  include  a  larger  number  of  small 
stations.  Even  here,  however,  the  errors  might  about  bal- 
ance each  other,  and  it  is  safe  to  assume  that  the  figures 
given  are  a  fairly  close  approximation  to  the  truth. 

The  percentage  of  the  total  output  used  at  the  station 
for  light  and  auxiliaries,  and  imaccounted  for,i  was  18.5  for 
the  companies  and  24.2  or  comparatively  31  per  cent 
higher,  for  the  public  plants.  As  the  amount  used  at  the 
station  by  the  former  is  4.9  per  cent  of  the  total,  the  actual 
current  unaccounted  for  is  13.6  per  cent,  whereas  the 
'public  plants  report  3.6  per  cent  used  at  station  and  20.6 
per  cent  unaccounted  for.  This  is  a  rather  noticeable  dis- 
crepancy, particularly  in  view  of  the  fact  that  in  1010  these 
items  amounted  to  only  21.5  per  cent  for  the  public  plants, 
and  were  somewhat  higher,  22.2  per  cent,  for  the  com- 
panies. In  five  years  the  total  unaccounted  for  and  used 
at  station  has  increased  only  31.6  per  cent  in  the  com- 
panies and  98.0,  or  more  than  three  times  as  rapidly,  in 
the  municipalities. 

From  an  examination  of  the  table  in  the  appendix  ^  it 
appears  that  the  municipal  plant  of  Chicopee  reports  an 
abnormally  large  amount  of  unaxjcounted  for,  44  per  cent, 
and  Mansfield  41  per  cent.  Hence,  if  we  deduct  these  high 
extremes  in  computing  the  average,  the  total  unaccounted 
for  becomes  only  21.1  per  cent  for  the  public  plants,  or 
about  the  same  as  in  1910,  which  is  still  far  ahead  of  the 

^  »  As  caUed  for  in  the  returns,  the  expression  "unaccounted  for"  means 
the  difference  between  the  total  amount  of  current  generated  and  pur- 
chased and  the  total  amount  delivered  to  all  consumers  together  with 
that  used  at  the  station.  Sometimes,  however,  particularly  m  1910,  the 
-  quantity  of  current  "used  at  station"  has  not  been  given,  and  is  accord- 
ingly mcluded  in  the  "unaccounted  for."  This  leads  to  a  difficulty  which 
there  seems  to  be  no  means  of  avoiding. 
2  P.  396. 


IN  MASSACHUSETTS 


101 


companies.   But,  on  more  careful  scrutiny,  we  find  that 
the  municipal  plant  of  Westfield  returns  an  incredibly  low 
quantity  of  unaccounted  for,  4  per  cent, —  surely  the 
result  of  mistaken  metering.    If  this  low  extreme  be  omit- 
ted, the  average  mounts  to  23  per  cent.    But  if  we  make 
these  adjustments  for  the  municipal  plants,  we  must  also 
apply  the  same  corrections  to  the  companies,  two  of  which 
report  a  very  much  higher  amount  of  una<;counted  for 
than  any  of  the  others,  Amesbury  32.4  per  cent,  and  Great 
Barrington  33.8  per  cent.    Eliminating  these  plants,  we 
get  an  average  of  only  17.4  per  cent  of  una<jcounted  for  in 
the  case  of  the  private  plants.  Upon  comparing  this  aver- 
age with  the  corrected  average  of  the  public  plants,  23  per 
cent,  we  find  the  relative  difference  against  the  latter  to  be 
more  than  32  per  cent,  slightly  greater  than  before  any 
corrections  were  made!  Or,  if  Westfield  be  retamed  in  the 
municipal  plant  averages,  as  it  singly  should  not  be,  the 
difference  is  reduced  to  something  more  than  21  per  cent. 
More  significant  than  any  of  these  averages,  however,  is 
the  fact  that  only  4  of  the  companies  report  an  amount  of 
current  used  at  station  and  unaccounted  for  in  excess  of 
20  per  cent,  and  in  6  this  item  is  15  per  cent  or  less.  Of  the 
public  plants,  on  the  other  hand,  12  have  losses  higher  than 
20  per  cent,  and  only  2  report  imder  15  per  cent. 

To  be  sure,  there  is  always  a  shrinkage  of  current  be- 
tween bus-bars  and  consumers'  meters.  These  losses  may 
be  occasioned  by  numberless  causes.  There  are  line  losses 
due  to  defective  insulation,  resistance  of  circuits,  foliage 
contacts,  and  atmospheric  conditions.  Then  there  are 
meter  and  transformer  losses,  perhaps  due  to  inaccuracy 
in  the  former  and  to  overloading  in  the  latter.  Sometimes 
the  lines  are  tapped  and  current  is  actually  stolen.  Station 
meters,  as  well  as  customers'  meters  may  fail  to  register 
properly,^  and  there  may  be  clerical  errors  in  the  records. 

1  On  this  point  see  ch.  xi.  pp.  308-309.  The  station  meters  of  the 
pubhc  plants  are  sometimes  very  undependable.  In  some  instances,  alsor 


't 


102 


MUNICIPAL  ELECTRIC  LIGHTING 


The  nature  of  the  load  is  also  very  significant.    Yet,  as 
external  conditions  seem  to  have  remained  about  the  same 
and  in  many  cases  markedly  to  have  improved  for  the 
public  plants,  this  greater  leakage  of  current  is  probably 
caused  largely  by  bad  engineering.   It  would  appear  that 
the  distributing  system  had  not  been  properly  maintained 
and  improved  during  the  past  few  years.    Though  the 
quantity  of  current  sold  by  an  electric  lighting  plant  can 
never  be  equal  to  the  amount  generated,  yet  the  aim  should 
always  be  to  keep  the  "efficiency  of  distribution  factor'*  as 
near  imity  as  possible.   In  the  two  groups,  however,  this 
factor  is  81.5  for  the  companies,  which  operate  by  far  the 
more  extensive  distribution  system,  and  only  75.8  for  the 
municipalities.    While  Holyoke  makes  a  better  absolute 
showing  than  most  of  the  other  plants,  its  current  unac- 
counted for  has  doubled  within  the  past  five  years,  though 
its  output  has  increased  only  50  per  cent,  and  this  in  spite 
of  the  fact  that  its  territory  and  business  are  the  most 
desirable  of  all.   While  engaged  in  the  local  survey  of  the 
plants  herein  discussed,  the  writer  was  constantly  told  by 
managers  of  the  companies  that  probably  the  greater  losses 
of  current  reported  by  the  municipal  plants  might  be  occa- 
sioned by  the  fact  that  smaller  line  transformers  are  used 
by  them  than  by  the  companies.  In  order  to  test  the  truth 
of  this  supposition  the  average  size  of  transformer  used  by 
each  group  of  plants  was  computed,  as  well  as  the  relative 
proportions  which  the  numbers  of  certain  sizes  bear  to  the 
total.    These  data  are  set  forth  in  Table  18. 

It  appears  that  in  1915  the  average  size  of  transformer 
was  6  kilowatts  for  the  municipal  plants,  Holyoke  excluded, 
and  6.45  kilowatts  for  the  companies  —  a  remarkably 
sHght  difference,  which  in  itself  could  scarcely  explain  the 
difference  in  current  unaccounted  for.  It  is  true,  however, 

there  Is  a  strong  presumption  that  customers'  meters  have  been  tampered 
with  for  the  purpose  of  causing  them  to  register  a  smaller  quantity  of 
current  than  was  actually  delivered. 


IN  MiVSSACHUSETTS 


103 


Table  18.  Transformer  Data  (Generating  Plants,  1915) 


t        Clou  qf  plant 


Municipal. 


Average 

tize 
(£.ff.) 


Percentage  distribution  of  the  differerU  eizM  of  line 
trantformere 


IK.W. 
or  lest 


6.00 


Company 0.45 


27.0 
24.1 


K.W. 


30.0 
83.0 


5+ to  5 
K.W. 


16.8 
18.5 


64- to  10 
K.W. 


14.1 
12.2 


Over  10 
K.W. 


13.3 
12.1 


that  the  individual  ca^es  vary  greatly,  and  that  the  smaller 
transformers  are  frequently  axjcompanied  by  the  larger 
losses.  But  it  might  be  argued  that,  even  though  the  aver- 
ages are  close  together,  this  is  because  the  numerous  small 
transformers  of  the  pubUe  plants  are  counterbalanced  by  a 
few  very  large  ones.  Now,  it  is  shown  that  the  percentages 
of  the  various  sizes  correspond  with  reasonable  closeness 
in  the  two  groups.  Yet  there  may  be  a  little  truth  m  the 
assumption  just  made,  for  the  percentage  of  the  smallest 
size  in  the  municipal  plants  exceeds  that  of  the  companies 
by  12  per  cent,  and  the  percentage  of  the  largest  size  ex- 
ceeds that  of  the  companies  by  10  per  cent. 

While  it  may  be  that  the  proportionately  greater  number 
of  transformers  under  1  kilowatt  accounts  for  part  of  the 
higher  losses,  it  is  probable  that  these  losses  aie  due  more 
to  the  older  and  inferior  types  of  instruments  f requenUy 
used  by  the  public  plants.  This,  in  turn,  is  often  a  result 
of  a  short-sighted  financial  policy  which  leads  to  the  reten- 
tion of  old  equipment,  even  at  a  loss  in  current,  m  order  to 
avoid  the  investment  in  newer  apparatus  which  will  cause 
the  construction  accounts  to  be  written  up.    In.  many 
instances  the  public  have  themselves  willed  a  false  economy 
in  this  regard.^ 

1  So  far  as  the  average  price  of  transformers  ^^  ~°^™^' *^J*  ^?!^  °°* 
geem  to  throw  much  light  upon  this  aspect  of  the  case  It  is  $60  for  the 
companies,  and  $60  for  the  mmiicipal  plants  -  or  $68  if  we  use  the  gross 
cost  account  instead  of  the  plant  account  (depreciated). 


104 


MUNICIPAL  ELECTRIC  LIGHTING 


Finally,  two  additional  possibilities  remain.  In  the  first 
place,  many  transformers  may  be  operated  at  "light  load** 
for  a  longer  period  of  time  in  the  public  plants.  While 
many  companies  follow  the  policy  of  "cutting  out"  as 
many  as  possible  of  their  transformers  at  certain  seasons 
of  the  year,  thus  greatly  reducing  their  "light  load  losses,'* 
it  is  very  probable  that  the  other  group,  not  so  much  con- 
cerned about  the  amount  of  ciurent  lost,  since  there  are 
no  stockholders  to  placate,  do  not  take  this  precaution.* 
In  the  second  place,  the  latter  may  overload  their  trans- 
formers, and  consequently  overheat  them,  to  such  an  ex- 
tent that  the  core  losses  are  greatly  increased.  ^  As  a  matter 
of  fact  the  writer  has  found  that  both  of  these  difficulties 
were  formerly  very  common  among  the  municipal  plants. 

From  1910  to  1915,  as  previously  indicated,  the  output 
of  current  in  the  public  plants  increased  76.5  per  cent,  or 
only  65  per  cent  if  Holyoke  is  included.  The  output  of  the 
companies  increased  only  60  per  cent,  or  57  per  cent  if  we 
omit  Buzzard's  Bay,  which  was  just  beginning  operations 
in  1910.  The  current  delivered  to  consumers,  on  the  other 
hand,  increased  70.1  per  cent  in  the  case  of  the  public 
plants  (58  per  cent,  including  Holyoke),  and  68.2  per  cent 
in  the  private  plants  (65.2  per  cent  with  Buzzard's  Bay 
out).  Hence  the  relative  total  increase  in  current  supplied 
has  been  practically  the  same.  The  evident  disparity  be- 
tween increase  of  output  and  increase  of  sales  results  from 
the  decided  reversal  of  position  between  the  two  groups  in 
the  matter  of  current  used  at  station  and  unaccounted  for. 

Table  19  presents  some  interesting  data  of  develop- 
ment. In  the  first  place,  the  relative  character  of  |  the  busi- 
ness done  by  the  companies  has  changed  but  Uttle  during 
the  past  five  years.  The  municipalities,  however,  if  we 
omit  Holyoke,  have  increased  their  power  business  more 
than  twice  as  rapidly  as  have  the  companies,  until  at 
present  their  relative  disposal  of  current  corresponds  very 
*  Cf.  Am.  Hand.  Elec.  Eng.,  p.  1625.  «  Ibid.,  p.  1626. 


IN  MASSACHUSETTS 


105 


Table  19. 

Kelattvie  Amounts  of  Current  DELivnukED 

Percentage  dii- 
poseU  of  curreiU 

Companiei 

Muniei- 
paiUiei 

Percentage  increase 

in  the  different  kiiuU 

of  bttsinest 

1910-1915 

1910 

1915 

1910 

1915 

Com- 
panies 

Munici- 
palities 

Street  lighting 

Commercial 

18.2 

30.6 
41.3 

10.0 
100. 

14.3* 

30.6 
42.7 

12.4 

36.1 

36.1 
.27.9 

0.9 

24.3 

31.0 
43.8 

0.9 

Street  lighting 

Commercial 

liorhtinff  .......... 

32.2 

60.0 

74.0 

109.0 

16.8 
(17.2)« 

48.2 

ligliting 

Power 

X*nvrtkT .............. 

(C1.9)« 

168.3 

Boles  to  other 
eompanies 

Saleg  to  other 
companies 

Total. 

(72.8)1 

50.0 
(3.32)  « 

100. 

100, 

100. 

Total 

68.2 
(65.2) » 

70.1 
(58.0) 

iBozz 

ard'sB 

ftv  omitted. 

s  H<4yoke  included. 

closely  to  that  of  the  latter,  except  in  the  items  of  street 
lighting  and  sales  to  other  companies.  The  inclusion  of 
Holyoke  seems  to  make  the  development  almost  identical 
in  the  two  groups  for  commercial  lighting^  and  power. 
Otherwise,  it  is  rather  surprising  to  note  that  the  private 
plants  have  increased  the  absolute  amount  of  current  sold 
far  aU  lighting  jmrposes  far  more  rapidly  than  have  the 
municipalities.  These  figures  certainly  refute  the  conmion 
statement  that  municipal  plants  do  not  get  the  power 
business.  It  is  probably  true,  on  the  other  hand,  that  these 
public  plants  are  working  largely  for  "paying"  loads, 
while  the  companies  are  forced,  by  public  pressure,  to  take 
on  a  good  deal  of  poor  business.  It  is  a  rather  difficult 
matter  to  coerce  a  municipality.  Yet  it  is  not  safe  to  make 
this  conclusion  absolute  until  the  local  conditions  have 
been  carefully  studied.' 

The  quantity  of  current  actually  sold  per  kilowatt 
capacity  of  generators  ("dehvered"  is  a  more  accurate 

*  By  "commercial"  lighting  is  meant  all  lighting  except  street  lightmg. 
The  returns  for  Massachusetts  make  no  separation  of  what  is  sometimes 
termed  "domestic"  lightmg. 

«  Cf.  ch.  XI,  pp.  30^310. 


«"1 
■1^ 


'  I 


106  MUNICIPAL  ELECTRIC  LIGHTING 

expression  so  far  as  the  public  plants  are  concerned,  since 
their  street  lighting  is  not  on  a  commercial  basis)  averaged 
for  each  mmiicipal  plant  778  kilowatt  hom-s  in  1910  and 
907  in  1915,  and  for  the  private  plants  947  and  1,052  at  the 
same  dates.  The  gains  were  respectively  17.6  and  11.1  per 
cent.  However,  to  secure  figures  which  show  the  true  con- 
ditions, purchased  current  should  be  deducted  in  either 
case,  whereupon  we  find  the  averages  to  be  765  and  761 
kilowatt  hours  for  the  municipalities,  and  896  and  968 
hours  for  the  companies,  —  an  absolute  decrease  of  0.5 
per  cent  for  the  former  and  an  increase  of  8  per  cent  for  the 
latter  during  the  five-year  period.  The  better  showing 
made  by  the  companies  was  probably  due  largely  to  a 
better  load  factor  in  1910,  as  their  power  business  was  at 
that  time  much  more  highly  developed,  and  in  1915  to  the 
smaller  losses  of  current  as  well  as  to  a  somewhat  more 
favorable  load  factor. 

The  per  capita  consumption  data  are  useful  only  in  a 
rough  sort  of  way,  as  showing  the  general  tendencies  in  the 
two  groups  of  plants.  It  is  significant  to  note,  however, 
that  while  the  total  niunber  of  kilowatt  hours  consumed 
per  capita  (sales  to  other  companies  being  deducted)  has 
increased  somewhat  more  rapidly  for  the  municipal  plants 
than  for  the  companies,  from  48.4  to  72.2,  or  49.2  per  cent 
for  the  former,  and  from  52.9  to  74.9,  or  41.5  per  cent  for 
the  latter,  the  figures  are  remarkably  close  together.  Evi- 
dently the  municipaUties  were  sUghtly  behind  in  their 
development  in  1910.  But,  in  1915,  since  the  growth  in 
number  of  inhabitants  in  the  districts  served  has  been 
ahnost  identical  in  the  two  cases,  14.6  and  14.7  per  cent 
respectively,  we  can  with  some  assurance  draw  the  con- 
clusion that  the  population  is  being  served  about  equally 
well  in  both  groups,  provided,  of  com-se,  that  the  ratio  of 
consumers  to  inhabitants  is  approximately  the  same.  This 
we  shall  later  find  to  be  the  case.' 

*  See  p.  110,  ir^ro. 


IN  MASSACHUSETTS 


107 


Upon  analysis  of  the  various  classes  of  consumption,  it 
appears  that  the  per  capita  use  of  current  for  commercial 
lighting  purposes  has  increased  much  more  rapidly  m  the 
case  of  the  companies,  while  the  sale  of  current  for  power 
has  increased  much  faster  for  the  municipalities  since  this 
feature  of  their  business  was  underdeveloped  in  1910. 
Absolutely,  the  per  capita  consumption  of  current  for  com- 
mercial fighting  is  somewhat  higher  for  the  companies, 
26.2  kilowatt  hours  as  compared  with  22.9  kilowatt  hours, 
a  difference  of  14.4  per  cent.  This  might  be  due  to  a  num- 
ber of  local  causes  which  it  would  be  difficult  to  discover, 
even  after  a  personal  visit  to  the  various  locahties.   Per- 
haps it  is  the  result  of  more  advertising  and  pushing  of 
business  by  the  companies,  particularly  as  regards  the  use 
of  electric  fans,  irons,  toasters,  and  other  fixtures  which 
are  on  the  fighting  circuits.  Perhaps,  also,  as  the  per  capita 
valuation  of  property  is  higher  in  the  cities  and  towns 
served  by  the  companies,  there  may  be  a  proportionately 
larger  number  of  wealthy  residents  in  these  places,  who 
use  more  current  for  lighting  purposes. 

The  power  consumption  is  also  14.4  per  cent  more  per 
capita  for  the  companies  (36.5  K.W.H.)  than  for  the  mu- 
nicipaUties (31.9  K.W.H.)  —  a  condition  which  we  might 
naturally  expect  in  larger  population  centers,  and  with  more 
effort  made  to  get  new  business  on  the  part  of  the  compames. 
Finally,  it  is  interesting  to  observe  that  the  absolute 
per  capita  consumption  of  current  for  street  fighting  is 
about  50  per  cent  greater  for  the  municipal  plants  (18.1 
KW.H.)    than  for   the  private  plants    (12.2  K.W.H.). 
Whether  or  not  this  means  better  pubfic  fighting  in  the 
case  of  the  former,  is  a  question  which  cannot  be  definitely 
answered,  though  no  information  secured  in  the  local  sur- 
vey would  warrant  such  a  conclusion.  Some  aspects  of  this 
matter  will  be  discussed  later  in  the  present  chapter.'  But 
it  is  a  reasonably  safe  general  assumption  that  mumcipah- 

•  1  i^.  125-128. 


)H 


I ) 


108 


MUNICIPAL  ELECTRIC  LIGHTING 


ties  owning  their  own  plants  would  not  feel  the  need  of 
economizing  so  carefully  in  the  use  of  the  current  which 
they  themselves  produce  as  would  those  whose  streets  are 
lighted  by  contract  with  private  concerns. 

4.  Customers  and  Per  Customer  Analyses  ^ 

The  total  number  of  customers,  eliminating  double 
counting,  has  increased  somewhat  more  rapidly  in  the 
group  of  companies  than  in  the  municipal  plants,  the  rates 
being  respectively  103  and  90.2  per  cent.  Due  to  this  fact, 
the  difference  between  the  average  number  of  customers 
per  plant  is  greater  in  1915  than  in  1910.  At  the  latter  date 
the  private  plants  averaged  29.5  per  cent  more  customers 
than  the  public  plants,  whereas  in  1910  the  difference  was 
only  21 .5  per  cent.  The  increase  in  the  number  of  customers 
using  current  for  light  has  been  correspondingly  greater 
for  the  companies.  As  the  municipal  plant  returns  in  1910^ 
were  not  made  out  in  such  a  way  that  the  total  number  of 
power  customers  could  be  separated  from  the  Ught  cus- 
tomers, the  year  1911  has  been  chosen  instead  for  the  study 
of  this  aspect  of  the  business  in  both  groups  of  plants.  Be- 
tween these  dates,  the  increase  in  number  of  power  cus- 
tomers was  almost  twice  as  rapid  in  the  municipal  plants 
—  a  growth  largely  accounted  for  by  the  fact  that  their 
power  business  was  only  partially  developed  in  1911.  On 
the  other  hand,  the  more  rapid  increase  in  number  of  Ught 
customers  in  the  case  of  the  companies,  suggests  a  rather 
strong  probability  that  the  municipalities  may  be  avoiding 
this  sort  of  business  on  the  ground  that  much  of  it  does  not 
"pay."  They  are  evidently  conservative  in  their  policy  of 
extending  service.  The  difference  here  found  is  doubtless 
in  large  measure  the  result  of  the  discrimination  made  by 
the  law  regarding  compulsory  service  by  companies  and 
by  municipal  plants.  This  aspect  of  the  case  will  later 
merit  further  attention  though  there  b  some  evidence 

It  *  Appendix*  k>.  404-407. 


I '' 


ill 


P 


IN  MASSACHUSETTS 


109 


which  suggests  that  the  pubKc  plants  are  at  present  serv- 
ing  a  larger  proportion  of  all  possible  customers  than  are 

the  companies.^  .it..     ^ 

Finally,  the  number  of  customers  per  100  mhabitants 
of  the  district  served  has  increased  just  30  per  cent  faster 
in  the  companies  than  in  the  municipal  plants,  though  the 
absolute  figures  are  slightly  less  in  the  case  of  the  former 
The  higher  ratio  shown  by  the  latter  (8.8  as  compared 
with  8.2)  is  more  than  explained  by  the  faxit  that,  with  only 
four  exceptions,  municipalities  have  not  extended  theu- 
service  beyond  their  own  boundaries.  Furthermore,  if  the 
comparison  be  Ihnited  simply  to  the  number  of  customers 
and  inhabitants  of  the  cities  or  towns  in  which  the  several 
plants  are  located,  we  find  that  the  ratio  becomes  8.4  per 
hundred  for  the  companies,  remaining  practically  the  same 
as  before  for  the  municipalities.  Since  the  density  of  popu- 
lation of  the  districts  served  by  the  private  plants,  even 
after  all  outside  localities  are  eliminated,  is  much  less  than 
that  of  the  municipalities  owning  their  plants,  we  might 
naturally  expect  a  much  greater  difference  between  these 
ratios.   In  conclusion,  the  pubUc  plants  doing  both  a  gas 
and  electric  business  show  a  ratio  of  consumers  to  popula- 
tion somewhat  under  the  average  ratio  for  the  group,  while 
the  corresponding  companies  apparently  have  a  ratio  con- 
siderably above  the  average.  This  fact  probably  indicates 
merely  that  the  latter  have  pushed  their  electric  busmess 
more  actively  than  have  the  former. 

In  this  connection  it  is  interesting  to  attempt,  from  a 
different  angle,  a  comparison  of  the  proportion  of  popula- 
tion served  in  each  case.  This  can  be  done  in  a  rather  crude 
fashion  by  finding  the  relation  which  exists  between  the 
total  number  of  light  customers  and  the  number  of  assessed 
dweUings  as  returned  to  the  Tax  Commissioner.  To  be  sure, 
this  does  not  make  aUowance  for  the  faet  that  many  of 
these  customers  are  stores,  offices,  halls,  churches,  etc. 

1  Cf .  next  page. 


\'^ 


110 


MUNICIPAL  ELECTRIC  LIGHTING 


The  errors  thus  arising,  however,  would  probably  be  about 
the  same  for  the  two  groups.  Accordingly,  taking  only  the 
number  of  dwellings  in  the  municipalities  in  which  the 
plants  are  located,  and  not  including  any  of  the  customers, 
in  outside  districts,  we  find  that  the  relations  are  as  set 
forth  in  the  following  table:  ^ 

Table  20.  Relation  between  Actual  and  Possible 
Light  Customers  (1915) 


Character  qf  plant 

No.  qf  light 
nutomera  * 

No.qf 

a»»et«ed 

dicellinffs  * 

Per  cent  q/" 

dtoeUings 

served 

I.  Generating  plants 

Municipal  * 

17,230 
19,923 

5,718 
4,654 

35,895 
48,201 

12,107 
12,907 

48  0 

Company 

41  5 

n.  Purchasing  plants 

Municipal ' 

49  0 

Company  * 

36  0 

*  Holyoke  out. 

a  Franklin  omitted  because  dwellings  are  not  returned. 


•  Norwood  out. 

*  Foreign  districts  excluded. 


From  the  figures  given  it  would  appear  that  in  both 
groups  the  municipal  plants  are  serving  a  larger  proportion 
of  the  possible  customers  than  are  the  companies;  and  this 
advantage  is  particularly  marked  in  the  case  of  the  pur- 
chasing plants,  as  we  are  led  to  expect  from  the  analyses 
presently  to  be  made.  It  must  be  borne  in  mind,  however, 
that  the  public  generating  plants  have  by  far  the  more 
compact  territory,  and  the  dwellings  served  are  for  the 
most  part  more  closely  grouped,  as  shown  by  the  analyses 
of  lines  and  streets  with  overhead  lines  as  well  as  by  the 
population  statistics.^ 

The  statistics  of  current  consumption  per  customer,  no 

^  The  number  of  customers  is  found  by  deducting  from  the  total  num- 
ber of  light  customers  the  number  of  customers  of  all  kinds  in  foreign 
territory.  The  result  is  very  nearly  accurate,  for  probably  few  of  those  in 
outside  districts  are  power  customers. 

«  Pp.  130-131,  147  injra. 


IN  MASSACHUSETTS 


111 


customer  being  counted  twice,  show  the  total  average 
for  both  light  and  power  to  be  623.6  kilowatt  hours  for  the 
municipalities,  an  increase  of  5.5  per  cent  over  the  average 
amount  in  1910.  Upon  inspection,  however,  it  appears  that 
11  out  of  the  17  plants  showed  a  decrease  in  this  regard, 
and  hence  it  is  clear  that  the  general  trend  was  toward  a 
less  consumption  of  current  per  consumer.  If  Holyoke  is 
included,  the  tendency  becomes  particularly  marked,  16.8 
per  cent.  The  companies  on  the  average  show  a  definite 
decrease  from  881  kilowatt  hours  in  1910  to  765  hours  at 
the  end  of  five  years,  or  13.2  per  cent  less.  This  decrease, 
as  well  as  the  increase  for  the  public  plants,  was  highly 
irregular.  Evidently  the  companies  have  more  large  cus- 
tomers than  the  municipaUties,  since  the  absolute  figures 
are  greater.  But  owing  to  the  nature  of  this  particular 
average,  it  is  hardly  safe  to  draw  definite  conclusions.^ 

The  quantity  of  current  consumed  per  lighting  customer 
decreased  22  per  cent  in  the  public  plants  diu-ing  the  five- 
year  period,  and  almost  14  per  cent  in  the  companies.  This 
decrease  is  probably  in  large  measiu*e  the  result  of  an  in- 
creased utilization  of  Tungsten  lights,  which  require  far 
less  electrical  energy  than  the  old  carbon  filament  lamps. 
As  the  Tungstens  seem  to  have  been  more  widely  used  by 
the  companies  than  by  the  municipaUties  in  1910,  the 
decrease  in  their  per  customer  consiunption  of  current 
from  this  cause  would  be  proportionately  less,  as  indicated. 
The  more  rapid  decrease  in  the  number  of  arc  Hghts  used 
might  also  have  had  a  slight  effect  in  making  the  decline 
greater  for  the  public  plants.   And,  thirdly,  it  is  certain 

1  It  must  be  explained  that  the  earlier  total  averages  in  this  case  are 
based  on  the  returns  of  current  sold  in  1910.  However,  the  average  power 
consumed  per  customer  is  based  on  data  given  for  1911,  due  to  the  fact 
that,  as  noted  above,  the  power  customers  could  not  in  1910  be  separated 
from  the  total  customers  in  the  municipal  plants.  For  this  reason,  and 
because  there  is  no  double  counting  of  those  customers  using  both  light 
and  power,  the  average  consumption  given  will  be  by  no  means  compar- 
able with  the  individual  items. 


u 


112  MUNICIPAL  ELECTRIC  LIGHTING 

that  both  private  and  public  plants  have  a  larger  propor- 
tion of  small  lighting  customers  than  in  1910. 

The  higher  absolute  figures  for  the  companies  (327  kilo- 
watt hours  as  contrasted  with  264  kilowatt  hours  for  the 
municipalities)  are  no  doubt  occasioned  by  a  compara- 
tively small  number  of  very  large  customers  —  a  condition 
which  we  might  expect  to  find  in  the  larger  centers  of  pop- 
ulation and  in  places  where  there  are  numerous  hotels,  etc. 
The  mclusion  of  Holyoke,  bringing  the  average  up  to  333 
kilowatt  hours,  slightly  higher  than  that  of  the  companies, 
helps  to  confirm  this  point  of  view.  Again,  the  companies 
have,  as  suggested  above,  probably  pushed  the  use  of 
those  numerous  fixtures  which  are  ordmarily  attached  to 
lighting  cu-cuits  much  more  energetically  than  have  the 
other  group.  Thus,  more  current  would  appear  to  be  used 
on  the  average  by  each  hghting  customer.   The  writer's 
reason  for  giving  some  weight  to  this  argument  is  based 
on  a  study  of  the  returns  from  the  various  plants,  which 
show  considerable  sums  spent  for  advertising,  soliciting, 
and  new  business  on  the  part  of  the  private  plants,  and 
very  little  on  this  account  spent  by  the  municipalities. 
Previous  analyses  prevent  the  assumption  in  this  connec- 
tion that  the  companies  are  not  developing  the  small 

lighting  business. 

It  is  Father  interestmg  to  find  an  identical  rate  of  increase 
during  the  period  in  the  average  amount  used  for  power 
per  customer  —  a  little  over  24  per  cent  in  each  case.  Nor 
is  it  surprising  that  the  absolute  figures  are  still  somewhat 
higher  for  the  companies  (6782  K.W.H.  vs.  6278  K.W.H.). 

5.  Connected  Load  and  Per  Connected  Load  Analyses* 

Few  of  the  records  kept  by  electric  lighting  plants  are 

less  satisfactory  than  the  connected  load  data,  though, 

Jor  rate-making  purposes,  few  are  more  significard.  From  the 

very  nature  of  the  business  it  could  not  well  be  otherwise, 

»  Appendix,  pp.  408-416. 


IN  MASSACHUSETTS 


113 


for,  even  with  the  most  skillful  management  and  careful 
engineering,  it  is  practicaUy  impossible  to  keep  track  of 
the  constant  changes  which  take  plaxie  m  the  various  kinds 
of  business.  Obviously  the  power  load  can  be  much  more 
neariy  approximated  than  the  Ughting  load.  Yet,  if  reason- 
ably careful  estimates  have  been  made,  the  average  con- 
nected loads  for  two.fau-ly  large  groups  of  plants,  provided 
we  can  get  them,  should  be  of  some  general  use  in  our  com- 
parative study.   Unfortunately  nearly  50  per  cent  of  the 
municipal  plants  have  not  seen  fit  to  give  complete  data 
on  this  point,  though  all  of  the  companies  have  returned 
the  mformation  required  by  the  Board.    As  so  small  a 
proportion  of  the  former  have  made  this  return,  the  figures 
submitted  by  the  remaining  ones  are  probably  open  to 
even  more  question  than  the  figures  of  the  companies. 

However  that  may  be,  we  have  the  total  connected  load 
of  9  municipal  plants,  Holyoke  excluded,  to  compare  with 
that  of  the  17  private  plants.  While  the  lighting  load  data 
are  totally  lacking  in  so  many  cases,  with  one  or  two 
exceptions  the  municipalities  have  returned  some  kind  o! 
a  connected  load  for  power,  and  the  street  lighting  data 
seem  to  be  complete.  Aside  from  carelessness  in  estimat- 
ing,  the  figures  axe  frequently  wrongly  reported,  as,  for 
example,  when  the  horse  power  of  motors  b  returned  as 
if  it  were  kilowatts,  and  when  an  incorrect  wattage  is  given 
for  lamps  even  though  the  number  may  be  correct.  Some 
of  these  maccuracies  can  be  found  and  rectified,  while 
others  cannot.  Whenever  possible  the  writer  has  checked 
the  returns  of  preceding  or  foUowing  years.  Thus,  it  has 
often  been  possible  to  correct  rather  serious  errors  which 
have  escaped  the  attention  of  the  Board's  accountants. 
Finally,  as  no  definite  connected  load  data  were  worked 
out  by  the  municipal  plants  before  1911,  in  order  to  reduce 
the  inaccuracies  to  a  minimum  that  year  mstead  of  1910 
has  usually  been  selected  for  comparison  with  1915.  No 
connected  load  occasioned  by  service  to  other  compames 


114 


MUNICIPAL  ELECTRIC  LIGHTING 


is  included.  Bearing  in  mind  these  cautions  and  restric- 
tions, we  are  in  a  position  to  make  a  few  analyses  of  the 
connected  load  figures.* 

It  is  necessary,  however,  to  know  something  about  the 
physical  character  of  the  connected  load,  the  kind  of  lamps, 
size  of  motors,  etc.,  and  to  study  the  changes  which  have 
been  taking  place,  before  we  can  intelligently  discuss  the 
load  itself.  We  find  the  conmiercial  lamp  data  of  the  public 
plants  so  unsatisfactory  that  they  hardly  merit  study. 
Though  all  of  them  attempted  to  give  the  number  of  lamps 
in  1910,  only  10  did  so  in  1915.  Excluding  Holyoke,  the 
9  plants  reporting  at  both  dates  show  an  increase  of  53.3 
per  cent  during  the  five-year  period,  while  the  companies 
report  twice  as  great  an  increase,  or  103.8  per  cent.  If 
Holyoke  be  included,  the  first  group  has  an  increase  of 
121  per  cent  instead  of  53.3.  No  doubt  many  of  the  pub- 
lic plants  have  greatly  underestimated  their  commercial 
lamps,  for  several  report  practically  no  increase  during  the 
period,  though  their  customers  have  almost  doubled  in 
number.  Hence,  we  find  in  this  group  an  actual  decrease 
in  the  number  of  lamps  per  customer  from  22.2  to  19.3,  or 
13.1  per  cent.  This  is  a  possibility y  but  scarcely  a  prob- 
ability in  view  of  the  lower  cost  of  lamps  in  1915.  The  com- 
panies, on  the  contrary,  absolutely  higher  in  the  beginning, 
show  an  increase  of  2.9  per  cent,  from  24.4  to  25.1  lamps 
per  customer.  When  Holyoke  is  included,  the  proportions 
become  nearly  equal.  In  the  per  capita  statistics,  though 
both  groups  were  close  together  in  1910,  the  municipalities 
were  somewhat  ahead  at  the  end  of  the  period  (2.22  to  1.9) 
having  gained  91  per  cent  as  opposed  to  a  72.7  per  cent  gaiu 
for  the  companies.  This  difference  can  be  readily  understood 
when  we  remember  the  wider  area  served  by  the  latter. 

*  As  the  Board  specially  requested  the  total  load  data  in  kilowatts 
from  the  municipal  plants  in  1911,  there  is  a  strong  presumption  that 
more  care  may  have  been  exercised  in  getting  this  information  then  than 
at  any  other  date. 


IN  JVIASSACHUSETTS 


115 


The  commercial  arc  lamp  data  are  probably  correct  in 
both  cases,  as  it  is  not  difficult  to  keep  track  of  them.  It 
appears  that  the  9  municipalities  giving  full  reports  in 
1915  had  only  20  commercial  arcs,  a  decrease  of  60  per 
cent  from  the  number,  49,  in  1910,  and,  for  aU  of  this  group 
excluding  Holyoke,  the  number  dropped  from  223  to  29. 
Holyoke  rep>orted  about  70  per  cent  of  the  total  number 
in  1910  and  85  per  cent  in  1915.  The  companies  returned 
667  arcs  at  the  former  date  and  201  at  the  latter,  a  decrease 
of  70  per  cent.  So  far  as  the  incandescent  lamps  are  con- 
cerned, little  can  be  made  out  of  the  records  regarding 
carbons  and  tungstens,  except  that  the  definitely  specified 
proportion  of  the  latter  is  much  higher  in  the  company 
plants. 

A  study  of  the  connected  power  load  reveals  the  fact 
that  the  number  of  motors  has  increased  much  more  rap- 
idly in  the  public  plants,  153  per  cent  during  five  years. 
The  companies  reporting  at  both  dates  show  an  increase 
of  only  52  per  cent.  All  but  one  of  the  first  group  did  a 
power  business  at  both  dates.  In  two  of  the  companies  the 
number  of  motors  could  not  be  ascertained  either  in  1910 
or  in  1911,  while  in  two  other  cases  there  was  no  motor 
service.  Only  one  did  not  supply  power  in  1915.  The 
average  capacity  of  motors  has  been  computed  for  the 
year  1911  instead  of  1910,  as  the  returns  at  this  date  seem 
more  trustworthy.  When  sufficient  data  could  not  be 
secured  for  this  year,  the  preceding  one  was  chosen.  It 
appears,  therefore,  that  the  average  kilowatt  capacity  of 
motors  was  higher  at  both  dates  for  the  municipal  plants 
(5.18  and  6.47  K.W.  as  contrasted  with  4.34  and  5.95  K.W. 
for  the  companies).  Though  the  rate  of  increase  has  been 
50  per  cent  more  rapid  in  the  case  of  the  private  plants 
(37  vs.  25  per  cent),  yet  the  average  capacity  is  still  9  per 
cent  greater  for  the  municipalities.  This  difference  might 
be  in  some  measure  due  to  the  fact  that  the  latter  have 
sometimes  reported  horse  power  for  kilowatts  or  have 


116  MUNICIPAL  ELECTRIC  LIGHTING 

failed  to  return  the  correct  number  of  motors,  as  seemed 
to  be  the  case  with  respect  to  their  commercial  lamps. 
Some  weight  may  also  be  given  to  the  argument  that 
throughout  the  period  the  companies  have  been  consciously 
attracting  the  smaller  customers.  And,  finally,  it  is  prob- 
ably in  large  measure  the  result  of  differences  in  local 
conditions,  for  the  municipalities  owning  their  plants  are, 
in  proportion  to .  population,  the  greater  manufacturing 
centers.  In  the  municipal  group  the  large  plants  of  Taun- 
ton, Chicopee,  Peabody,  and  Danvers  seem  to  be  for  the 
most  part  responsible  for  the  higher  average  capacity  of 
motors.  Of  the  companies,  on  the  other  hand,  Amesbury, 
Plymouth,  and  Quincy  also  have  a  large  number  of  motors 
of  more  than  average  size.^ 

The  rate  of  increase  in  the  total  connected  load  of  the 
municipal  plants  reporting,  67.4  per  cent,  or  66.6  par  cent 
including  Holyoke,  is  practically  the  same  as  that  in  the 
companies,  63.8  per  cent.    These  rates  coincide  closely 
with  the  rate  of  increase  in  the  amount  of  current  sold  for 
all  purposes  in  the  two  groups,  70.1  and  68.2  per  cent  re- 
spectively. The  wider  spread  in  the  case  of  the  municipal 
plants  between  the  rate  of  increase  of  connected  load  and 
the  rate  of  increase  in  current  dehvered,  in  spite  of  the  fact 
that  they  seU  a  very  small  quantity  of  current  to  other 
companies,  is  occasioned  partially  by  the  fact  that  the 
character  of  their  load,  much  worse  in  1911,  has  been  un- 
proving  more  rapidly  than  that  of  the  companies.    The 
figures  are  further  mfluenced  by  the  fact  that  only  9  out 
of  17  pubhc  plants  are  represented,  and  these  among  the 
smaUer  ones.   It  is  also  probable  that  in  many  cases  not 
all  of  the  load  was  reported,  and  that  the  Httle  consumers 
with  large  loads  have  not  been  encouraged  by  the  muni- 
cipalities.   On  the  other  hand,  the  private  plants,  be- 
cause of  the  important  commercial  considerations  involved, 

1  A  discussion  o!  the  street  lighting  data  will  be  reserved  tiU  the  con- 
nected load  has  been  studied  in  ita  varied  aspecU. 


IN  MASSACHUSETTS 


117 


would  probably  overestimate  rather  than  underestimate 
their  connected  load.  Holyoke,  the  most  efficient  of  the 
municipal  plants,  shows  an  increase  in  connected  loaxi 
considerably  more  rapid  than  the  increase  in  amount  of 

business. 

The  connected  load  of  the  companies  averages  80.4 
per  cent  greater  than  the  average  generating  capacity  per 
plant,  while  that  of  the  9  municipalities  averages  93.2  per 
cent  greater.  The  higher  ratio  of  the  latter,  since  the  pro- 
portionate amount  of  current  bought  is  about  the  same  in 
either  case,  may  be  accounted  for  m  some  measure  by  the 
fact  that  the  public  plants  still  have  the  larger  proportion 
of  inactive  load.  It  is  also  even  more  probable  that  they 
are  not  anticipating  future  needs  by  enlarging  their  gen- 
erating capacity,  to  the  extent  that  the  companies  are 
doing  so.i  The  difference  between  the  two  ratios,  however, 
not  much  over  16  per  cent,  is  not  in  itself  very  significant. 

In  the  7  public  plants  which  furnish  sufficient  data  for 
computation,  the  ratio  of  the  maximum  station  load  to 
the  connected  k>ad  is  29.4  per  cent,  and,  by  a  surprising 
coincidence,  the  ratio  of  the  14  companies  is  also  29.4  per 
cent.  Expressed  in  better  terms,  the  total  connected  load 
in  both  cases  is  3.4  times  the  total  maxunum  load  upon 
the  stations.  This  would  seem  to  indicate  a  similar  "poten- 
tial" diversity  factor  for  the  two  groups,  if  we  may  com  a 
new  expression.  These  figures  furnish  us  no  clue,  however, 
to  the  true  diversity  factor,  which  is  the  ratio  of  the  maximum 
demand  of  tlie  system  upon  the  station  to  the  sum  of  the  sepa- 
rate or  individual  maxima.    If  allowance  is  made  for  the 
fact  that  a  considerable  portion  of  the  companies*  maximum 
demand,  probably  not  less  than  10  per  cent,  is  occasioned 
by  sales  to  other  companies  or  to  municipalities,  whereas 
this  influence  is  practically  nil  in  the  case  of  the  municipal 
plants,  we  can  readily  see  that  the  "potential"  diversity 
factor  would  be  by  so  much  the  greater  for  the  public 

»  Cf.  pp.  303-304,  swpra. 


118 


MUNICIPAL  ELECTRIC  LIGHTING 


plants,  since  the  connected  load  data  do  not  include  these 
foreign  loads.  On  these  grounds  it  would  probably  be  safe 
to  assume  that  the  companies  really  have  a  more  favorable 
diversity  factor  than  the  public  plants,  in  so  far  as  their 
individual  customers  are  concerned.  The  writer  feels  that 
this  deduction  is  reasonably  correct,  though  because  of 
the  lack  of  more  adequate  data,  the  comparison  attempted 
is  interesting  rather  than  conclusive. 

Upon  examination  it  appears  that  the  proportionate 
distribution  of  the  total  connected  load  among  the  various 
classes  of  service,  commercial  lighting,  street  lighting,  and 
power,  is  practically  the  same  in  the  two  groups.  The 
public  plants  are  a  very  little  in  the  lead  for  both  of  the 
lighting  loads,  while  the  private  plants  have  a  slightly 
higher  percentage  of  power  load.  In  both  cases,  however, 
the  power  load  is  close  to  50  per  cent  of  the  combined  light 
loads.  The  very  noticeable  difference  between  the  muni- 
cipal power  load  of  the  public  plants  and  that  of  the  pri- 
vate plants,  an  average  of  20.26  kilowatts  per  plant  in 
the  former  and  of  only  6.47  in  the  latter,  is  for  the  most 
part  accounted  for  by  the  fact  that  a  number  of  the  muni- 
cipalities operate  pumping  stations  or  sewage  disposal 
plants  in  connection  with  their  electric  light  stations.  Also 
it  is  but  natural  that  localities  serving  themselves  should 
be  generous  with  that  service. 

Dming  the  past  four  years  there  has  been  almost  no 
change  in  the  percentage  distribution  of  the  various  con- 
nected loads  of  the  companies,  excepting  a  small  decrease 
in  the  lighting  loads.  The  municipalities,  on  the  contrary, 
have  been  subject  to  a  very  marked  percentage  decrease 
(from  79  to  64.6  per  cent)  in  the  conunercial  Ughting  load, 
and  the  absolute  increase  has  been  comparatively  slight, 
only  ^.6  per  cent  as  contrasted  with  61.9  per  cent  for  the 
companies.  Their  gain  has  been  largely  in  the  power  load, 
which  has  increased  absolutely  179.4  per  cent,  so  that  its 
proportion  of  the  entire  load  has  doubled  in  four  years. 


IN  MASSACHUSETTS 


119 


now  standing  at  32.3  per  cent  whereas  it  was  only  16.1 
per  cent  of  the  total  in  1911. 

The  rate  of  increase  in  the  power  and  commercial  light- 
ing loads  of  the  companies  corresponds  with  remarkable 
closeness  to  the  rate  of  increase  in  the  current  sold  for 
these  purposes  —  61.9  to  60  per  cent  for  lighting  and  74.3 
to  74  per  cent  for  power.   For  the  public  plants  the  rate 
of  increase  of  the  power  load  roughly  approximates  the 
rate  of  increase  of  ciurent  delivered  to  power  consumers 
(179.4  to  168.3).  But  there  is  not  the  same  close  connec- 
tion in  the  case  of  the  commercial  lighting  loads  and  sales 
of  current  for  Ughting.  The  increase  in  commercial  lighting 
sales  (48.2  per  cent)  seems  to  have  been  much  more  rapid 
in  the  municipal  plants  than  the  increase  in  lighting  load 
(28.6  per  cent).   While  this  might  mean  an  improvement 
in  the  ah-eady  existing  Ughting  load,  it  probably  signifies 
that  the  estimate  of  the  number  of  lamps  connected  is  too 
low.    Holyoke  shows  a  closely  parallel  increase  in  both 
items.   The  absolute  increase  in  the  street  Ughting  loads, 
which  are  probably  as  accurate  as  could  be  wished  for,  has 
been  negUgible  in  both  cases,  though  slightly  more  rapid 
for  the  companies.    Hence  the  absolute  increase  in  the 
amount  of  current  deUvered  for  street  Ughts  and  the  rela- 
tively greater  increase  in  the  case  of  the  companies,  are 
occasioned  by  longer  hours'  use  of  lamps  per  night  and 
by  a  larger  number  of  nights'  use  per  month.   Finally,  in 
ail  of  these  comparisons  we  must  bear  in  mind  the  fact 
that  we  are  contrasting  the  increase  in  connected  load 
since  1911  with  the  increase  in  current  sold  or  delivered 

since  1910. 

Owing  to  the  unsatisfactory  charaxiter  of  both  the  popu- 
lation and  the  connected  load  data,  it  is  scarcely  worth 
while  to  deduce  any  relations  between  the  two.  In  passing, 
however,  it  may  be  noted  that  the  increase  of  the  per 
cajrlta  connected  load  has  been  somewhat  more  rapid  for 
the  companies  (from  103  to  147  watts,  or  52.7  per  cent) 


m 


ri': 


120 


MUNICIPAL  ELECTRIC  LIGHTING 


than  for  the  municipalities  (from  129  to  169  watts,  or  31 
per  cent).  This  may  show  an  increasing  effort  to  develop 
the  territory  served  by  the  companies;  while  the  higher 
absolute  figures  for  the  municipalities  are  probably  a  re- 
sult of  the  more  restricted  area  served  and  the  denser  poj?- 
nlation. 

The  aggregate  light  and  power  connected  load  j>er  cus- 
tomer seems  to  have  increased  very  slightly,  from  1.36  to 
1.40  kilowatts,  or  3  per  cent,  in  the  group  of  9  municipal 
plants,  and  to  have  decreased  an  inconsiderable  amount, 
from  1.83  to  1.75  kilowatts,  or  4.4  per  cent,  in  the  other 
group.*  The  average  lighting  load  of  the  former,  0.950 
kilowatts,  is  17.4  per  cent  less  than  in  1911,  while  that  of 
the  private  plants  has  decreased  only  6.6  per  cent  to  1.13 
kilowatts.  This  difference  in  rate  of  decrease  corresponds 
roughly  to  the  rate  of  decrease  in  the  amount  of  current 
consumed  per  customer  for  lighting  purposes.  The  fact 
that  the  absolute  figures  are  higher  for  the  companies  and 
that  their  rate  of  decrease  has  been  less,  should  be  inter- 
preted in  the  light  of  what  has  already  been  said  regarding 
the  total  load  data  and  the  consumption  of  lighting  current 
per  customer.  If  the  number  of  lamps  reported  by  the 
municipaUties  is  too  low,  as  is  probable,  the  connected 
lighting  load  per  customer  would  naturally  appear  less 
than  it  should  be. 

The  average  power  load  per  customer,  as  might  be  ex- 
pected, has  almost  doubled  in  the  14  mimicipal  plants  re- 
porting at  both  dates,  and  has  increased  only  ^.5  per  cent 
in  the  companies,  so  that  the  absolute  figm-es  are  now  very 
close  together,  9.46  (9.22)  kilowatts  for  the  former,  and  9.74 

•  In  the  averages  computed  in  this  connection,  the  municipal  power 
load  is  included,  since  it  is  impossible  in  most  cases  to  separate  this  item 
from  the  total  power  load  in  1911.  In  1915  the  municipal  power  load  o! 
the  public  plants  amounted  to  only  3.7  per  cent  of  the  total  power  load, 
and  to  less  than  2  per  cent  of  tlie  total  light  and  power  load.  In  the  com- 
panies the  percentage  of  municipal  power  load  reported  is  so  small  as  to 
be  negligible.  Hence  the  averages  will  be  little  affected  by  this  inclusion. 


IN  MASSACHUSETTS 


121 


for  the  latter.  The  rate  of  increase  for  the  private  plants 
coincides  with  the  rate  of  increase  in  current  consumed  per 
power  customer  (24  per  cent),  and  we  can  probably  assume 
that  the  company  returns  are  reasonably  accurate  in  this 
connection.  On  the  other  hand,  the  fact  that  the  public 
plants  show  an  increase  of  only  24.1  per  cent  in  the  con- 
sumption of  current  per  power  customer  and  95.1  per  cent 
increase  in  each  power  customer's  connected  load,  is,  to 
say  the  least,  rather  puzzling.  Even  when  we  eliminate 
the  large  plants  of  Danvers  and  Westfield,  which  show 
an  abnormally  large  increase  in  this  particular,  the  rate 
still  does  not  fall  below  70  per  cent. 

This  discrepancy  cannot  be  accounted  for  by  any  un- 
usual increase  in  connected  power  load  late  in  the  year 
1914-15.  It  may  mean  that  some  of  the  public  plants  are 
still  reporting  their  power  load  in  horse  power  as  they 
formerly  did,  instead  of  in  kilowatts  as  called  for  in  the 
returns.  This  would  make  their  reported  load  considerably 
higher  than  the  actual  load,  since  a  horse  power  is  only 
three  fourths  of  a  kilowatt.  As  the  writer  has  discovered 
and  corrected  a  number  of  such  cases,  it  is  probable  that 
there  are  others.  Yet,  as  we  shall  find  the  cmrent  con- 
sumed per  kilowatt  connected  power  load  almost  identical 
in  the  two  groups,  this  assumption  does  not  seem  exactly 
to  fit  the  case,  for,  if  the  kilowatts  be  reduced  to  horse 
power,  it  would  tend  to  make  the  consumption  per  kilo- 
watt hour  considerably  higher  for  the  public  plants.  This 
would  indicate  a  large  number  of  power  customers  with 
very  favorable  loads,  and  it  would  not  make  allowance  for 
the  fact  that  the  companies  also  might  have  reported 
wrongly.  On  the  other  hand,  if  we  assume  that  the  returns 
are  approximately  correct  on  this  point,  it  evidently  means 
that  the  public  plants,  with  so  rapid  an  increase  in  con- 
nected power  load,  must  have  taken  on  a  large  proportion 
of  small  power  customers.  However,  since  the  average 
size  of  the  connected  motors  is  greater  in  the  case  of  the 


i 


182 


MUNICIPAL  ELECTRIC  LIGHTING 


I 


municipal  plants,  this  view  of  the  matter  can  hardly  be 
accm-ate.  Nor  does  it  seem  probable  that  those  customers 
occasioning  a  marked  increase  in  the  load  would  consume 
a  relatively  small  quantity  of  current. 

Knowing  that  the  consumption  of  current  per  power 
customer  has  increased  at  an  equal  rate  for  both  groups  of 
plants  and  that  the  consumption  per  kilowatt  connected 
load  seems  to  have  decreased  at  about  the  same  rate  in 
both  cases,  we  will  not  attempt  further  to  discover  why 
the  rate  of  increase  m  connected  power  load  per  customer 
in  the  municipal  plants  is  four  times  as  great  as  that  of  the 
companies,  and  four  times  as  great  as  the  rate  of  increase 
of  current  used  per  power  customer  in  either  case.  It  is 
also  reassuring  to  know  that  Holyoke,  the  paragon  of 
public  plants  in  the  State,  shows  only  a  slight  increase  in 
connected  load  per  power  customer. 

Having  deducted  the  sales  to  other  companies,  we  find 
that  the  yearly  consumption  of  current  per  kilowatt  con- 
nected load  has  decreased  10.8  per  cent  (from  57S  to  511 
K.W.H.)  for  the  companies  since  1911.   For  the  munici- 
palities there  is  an  apparent  increase  of  18.5  per  cent  (from 
443  to  5^  K.W.H.).    This  decrease  on  the  part  of  the 
former  is  probably  accounted  for  by  the  fact  that  their 
service  has  been  extended  more  rapidly  to  the  poorer  cus- 
tomers.   But,  if  Holyoke  be  included  with  the  pubUc 
plants,  the  decrease  is  about  the  same  in  the  two  groups. 
Upon  analysis  of  the  different  classes  of  business,  it 
appears  that  the  amount  of  current  consumed  per  kilowatt 
connected  Ughting  load  in  the  company  plants  has  de- 
creased 5.6  per  cent  during  the  period,  whereas  there  has 
been  an  increase  of  10  per  cent  in  the  municipaUties,  so 
that  the  relative  amounts  consumed  are  now  respectively 
289  and  252  kilowatt  hours.  For  reasons  which  are  fairly 
obvious  from  what  has  aheady  been  said,  we  would  expect 
the  higher  absolute  figures  in  the  case  of  the  companies. 
The  effect  of  seaside  resorts  on  the  use  of  maximum  demand 


IN  MASSACHUSETTS 


123 


can  be  clearly  seen.  Though  the  increase  of  this  item  for 
the  public  plants  might  indicate  that  their  business  is  being 
rapidly  pushed,  it  is  probably  due  still  more  to  the  fact 
that  unsatisfactory  customers  are  discouraged  by  the  pro- 
vision in  the  law  to  the  effect  that  the  cost  of  extensions 
and  connections  on  the  customer's  property  can  be  assessed 
wholly  or  in  part  upon  him  as  well  as  by  the  lact  that  no 
city  or  town  can  be  compeUed  to  furnish  electricity  without 
an  express  order  of  the  Board  of  Gas  and  Electric  Light 
Commissioners.!  There  will  be  occasion  later  to  revert  to 
this  aspect  of  the  case.  Finally,  the  failure  to  report  a 
sufficient  number  of  lamps  would  also  make  the  mcrease 

appear  greater. 

There  is  a  close  correspondence  between  the  increase  m 
the  number  of  kilowatt  hours  consumed  per  street  lighting 
load  in  the  two  cases,  10  per  cent  for  the  municipalities 
and  12.3  per  cent  for  the  companies.  This  simply  means 
that  the  lamps  are  being  used  a  greater  number  of  hours 
per  year  than  formerly.  The  power  consumption,  per  con- 
nected load,  on  the  other  hand,  has  decreased  ^m  both 
groups,  but  with  greater  rapidity  in  the  municipalities. 
The  figures  are  now  close  together,  being  699  kilowatt  hours 
for  the  companies  and  674  for  the  pubUc  plants.    This 
decrease  doubtless  signifies  that  new  uses  for  power  have 
been  found,  whUe  the  seemingly  more  rapid  decrease  m 
the  municipal  plants,  which  were  slightly  in  the  lead  m 
1911,  may  or  may  not  be  the  result  of  inaxxuracy  m  report- 
ing the  connected  load. 

Table  21  presents  in  a  convenient  form  some  compari- 
sons between  the  connected  load  and  the  consumption  of 
current  in  the  two  groups  of  plants.  As  we  have  found  the 
number  of  kilowatt  hours'  consumption  per  kilowatt  con- 
nected load  for  the  various  classes  of  service,  and  smce  the 
maximum  use  would  necessarily  be  8,760  hours,  the  num- 
ber  of  hours  in  a  year,  it  is  a  comparatively  simple  matter 
1  Mass.  1914,  ch.  742,  sects.  117. 118. 


124 


MUNICIPAL  ELECTRIC  LIGHTING 


IV ; 


Table  21. 

Utilization  of  Maximum  Demaj^d 

Connected  load 

K.  W.H.  Con- 
sumed per  K.  W. 
connected  load 

Number  of  days^ 
use  per  year 

Number  of  Jutxurs'' 
use  per  day 

Per  cent  of 
possible  use 

Com- 
panies 

Munici- 
palities 

Com- 
panies 

Munici- 
polities 

Com- 
panies 

Muniet- 
polities 

Com- 
panies 

Mmiet- 
palitiea 

Total 

611 

289 
699 

3437 

525 

252 
674 

3783 

21.2 

12.0 
29.1 

143.2 

21.9 

10.6 
28.0 

157.6 

1.39 

0.80 
1.90 

9.40 

1.44 

0.70 
1.80 

10.40 

6.8 

3.3 

8.0 

39.2 

6.0 

Commercial 
lighting  . . . 

Power 

Street    light- 
ing  

2.9 
7.7 

43.2 

to  find  the  number  of  days'  use  of  the  maximum  demand, 
the  number  of  hours'  use  per  day,  and  the  ratio  which  the 
actual  use  bears  to  the  possible  use.  As  the  connected  load 
used  is  that  found  at  the  end  of  the  year,  and  not  the  aver- 
age for  the  year,  the  "  use  "  factor  in  each  case  will  be  some- 
what too  small.  The  remarkably  close  coincidence  between 
the  two  sets  of  plants  would  lead  us  to  infer  that  the  local 
conditions  are  similar.  But  full  allowance  must  be  made 
for  the  numerous  possibiHties  of  error  already  mentioned. 

6.  Street  Lighting  Data  and  Analyses  * 

Before  leaving  the  subject  of  connected  load,  attention 
must  be  paid  to  the  character  and  development  of  the 
street  Ughting  load,  which,  for  our  purposes,  stands  in  a 
class  by  itself,  since  this  is  the  portion  of  the  business  of 
municipal  plants  that  is  not  carried  on  as  a  commercial 
undertaking.  The  data  in  this  case  are  fairly  trustworthy, 
for  the  returns  call  for  great  accuracy.  As  the  street  lamps 
of  other  municipalities  supplied  by  the  public  plants  con- 
stitute only  5.5  per  cent  of  the  total  for  this  group,  they 
have  been  omitted  in  the  computations  so  that  we  can 
better  study  the  conditions  of  street  lighting  in  the  cities 
and  towns  which  have  their  own  Hghting  plants.  These 
foreign  street  lights  are  really  a  part  of  their  commercial 

•    *  Appendix,  pp.  416-419, 


IN  MASSACHUSETTS 


125 


lighting  business.  When  there  is  a  possibility  that  their 
inclusion  would  have  a  noticeable  effect  upon  the  averages, 
mention  will  be  made  of  the  fax;t. 

The  percentage  of  arc  lights  was  higher  at  both  dates 
for  the  companies,  and  the  decrease  in  numbers  has  been 
just  twice  as  rapid  in  the  municipal  plants.  At  present  the 
arcs  are  equal  to  7.9  per  cent  of  the  total  number  of  street 
lamps  in  the  latter  group  (11  per  cent  if  Holyoke  be  in- 
cluded) and  10.6  per  cent  of  the  total  in  the  former.  There 
does  not  seem  to  be  any  marked  difference  in  the  kind  of 
arcs  used  in  the  two  cases.  Of  the  incandescent  lamps  the 
carbons  amounted  to  ^  per  cent  of  the  total  for  municipal 
plants  in  1910  and  to  5  per  cent  in  1915.  For  the  companies, 
however,  the  carbons  formed  only  18  per  cent  of  all  mcandes- 
cents  at  the  earlier  date,  and  in  1915  less  than  1  per  cent. 
The  increase  in  the  total  number  of  street  Hghts  has 
been  far  more  rapid  for  the  companies  than  for  the  mu- 
nicipalities.   Though  five  years  ago  the  number  of  lamps 
per  plant  was  25  per  cent  higher  in  the  public  plants,  the 
figiu^s  are  now  approximately  the  same.  This  means  that, 
as  the  average  population  of  the  districts  served  is  greater 
in  the  former  group,  the  number  of  lamps  per  capita  will  be 
somewhat  less.   Yet  the  companies  have  extended  their 
service  continuously  until  one  lamp  now  serves  24.8  per- 
sons, while  in  the  other  group  there  is  one  lamp  to  18.1 
inhabitants.  Obviously  the  more  scattering  population  of 
the  former,  as  well  as  the  somewhat  greater  number  of  arc 
lights  will  help  to  account  for  the  difference,  in  spite  of  the 
fact  that  the  average  wattage  of  lamps  is  now  equal.  Also, 
it  is  to  be  expected  that  municipalities  would  keep  them- 
selves generously  supplied  with  lights,  the  real  cost  of 
which  is  not  disclosed  by  the  accounts  kept,  and  which  in 
some  cases  may  be  partially  paid  for  out  of  the  profits 
made  in  the  commercial  lighting  business. 

The  number  of  feet  of  street  lines  per  lamp  is  511  in  the 
municipal  plants  and  617  in  the  companies,  though  the 


111 


126 


MUNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


127 


^li 


w 


length  per  commercial  customer  is  about  the  same  (329 
and  303  feet  respectively).  The  greater  length  of  "  over- 
head" per  lamp  in  the  latter  (436  vs.  299)  is  accounted  for 
largely  by  the  fact  that  they  serve  a  more  sparsely  settled 
territory,  of  which  more  anon.  There  is  one  lamp  to  1.6 
commercial  customers  in  the  pubHc  plants  and  to  2.1  cus- 
tomers in  the  other  group.  Probably  geographical  condi- 
tions go  far  to  explain  the  difference,  as  well  as  the  fact 
that  the  companies  are  located  for  the  most  part  in  places 
which  are  residential  rather  than  manufacturing.  After  a 
tedious  computation  it  appears  that  the  "rated**  candle 
power  of  illumination  per  capita  has  decreased  at  an  equal 
rate  in  both  groups,  now  standing  at  8  candle  power  for  the 
public  plants  (or  only  7  candle  power  if  Holyoke  be  in- 
eluded),  and  6.4  for  the  private  plants.^  This  decrease  in 
per  capita  candle  p)Ower  is  doubtless  largely  accounted  for 
by  the  increased  use  of  smaller  lamps  more  effectively 
placed  than  formerly.  As  might  be  expected,  due  to  the 
advance  in  the  art  of  lighting,  the  decrease  in  the  per 
capita  wattage  of  lamps  has  been  more  rapid  than  the 
decrease  in  candle  power  —  a  fact  which  shows  the  in- 
creasing lamp  efficiency.  This  decrease  in  wattage  has 
been  more  marked  in  the  case  of  the  companies.  Though 
the  differences  in  all  of  these  relations  are  surprisingly 
constant,  we  are  scarcely  justified  in  attempting  to  draw 
definite  conclusions  therefrom. 

^  It  is  an  almost  hopeless  task  to  endeavor  to  discover  the  real  candle 
power  of  the  street  lights.  The  municipalities  have  usually  reported  the 
supposed  candle  power  of  certain  classes  of  lamps,  and  their  estimates 
have,  with  interpretation,  been  accepted  by  the  writer.  Then,  in  com- 
puting the  candle  power  for  the  companies,  which  make  no  return  of 
these  data,  the  same  kind  of  lamps  are  assumed  to  have  the  same  candle 
power  as  in  the  municipal  plants.  Hence  any  errors  will  be  about  evenly 
distributed  between  the  two  groups.  Needless  to  say,  the  real  candle 
power  depends  upon  a  number  of  conditions  which  it  is,  under  the  circum- 
stances, impossible  for  us  to  evaluate.  So  far  as  the  incandescents  are 
concerned,  the  figures  are  a  close  approximation;  but  arc  lamps  are  prob- 
ably much  overrated.  It  is,  therefore,  safe  to  say  that  the  per  cajnta 
candle  power  here  given  is  somewhat  too  high. 


In  which  of  these  groups  of  plants  the  inhabitants  are 
the  better  served  by  their  street  hghts  could  probably  be 
decided  only  after  a  period  of  residence  in  each  locality. 
It  may  be  that,  as  a  result  of  more  skillful  engineering,  the 
companies  are  really  serving  the  people  more  adequately 
with  fewer  lamps.  And  it  may  very  probably  be  true  that 
in  the  closely  populated  portion  of  the  cities  and  towns  the 
per  capita  service  is  identical.  This  supposition  could  be 
verified  only  by  finding  the  relations  between  the  number 
of  inhabitants,  extent  of  territory,  and  number  of  street 
lamps,  in  the  business  and  residential  sections  of  the  places 
under  consideration.  And,  furthermore,  condition  and 
width  of  streets,  color  of  pavements  and  sidewalks,  arrange- 
ment, height  and  color  of  buildings,  amount  of  foliage, 
local  topography,  and  character  of  the  business  engaged 
in,  all  play  an  important  part  in  determining  the  needful 
nmnber  of  street  Ughts,  even  if  we  grant  that  the  engineer- 
ing skill  is  the  same  in  either  group  of  plants.  However, 
the  local  survey  made  has  convinced  the  writer  that  the 
companies,  by  virtue  of  their  contracts,  are  forced  to  give 
far  more  careful  attention  to  the  problem  of  street  lighting, 
than  do  the  public  plants. 

Waiving  the  engineering  aspects  of  the  case,  the  records 
are  for  the  most  part  definite  regarding  the  quantity  of 
service  rendered  by  the  street  lamps  in  both  groups.  The 
average  daily  number  of  lamps  in  use,  as  would  be  expected, 
varies  little  from  the  actual  number.  The  average  number 
of  nights'  use  per  month  is  practically  the  same  in  both 
cases,  being  30  nights  for  the  municipalities  and  29.7  for 
the  companies.  The  increase  has  naturally  been  more 
rapid  for  the  latter  as  they  showed  a  relatively  lower  figure 
five  years  earlier.  However,  numerically  weighted,  the 
average  number  of  hours'  use  of  lamps  per  night  is  consid- 
erably lower  for  the  companies  (7.8  hours)  than  for  the 
municipalities  (9.1  hours),  though  the  rate  of  increase 
during  the  period  has  been  much  more  rapid  for  the  former 


128 


MUNICIPAL  ELECTRIC  LIGHTING 


(16.9  per  cent)  than  for  the  latter  (5.8  per  cent).'  If  we 
should  eliminate  from  the  companies  the  hghts  which 
are  operated  in  foreign  localities,  constituting  about  one 
eighth  of  the  total  and  burning  for  the  most  part  on  short 
schedules,  their  average  number  of  hours'  use  per  night 
would  be  somewhat  increased. 

But  it  would  be  foreign  to  oiu*  purposes  to  discuss  at 
greater  length  the  more  technical  aspects  of  the  problem. 
The  accompanying  table  (Table  22)  sums  up  some  inter- 
esting computations  regarding  the  street  lamps  in  the  two 
groups  of  plants  (Holyoke  being  excluded). 

Table  22.  Street  Lighting  Data  (Generatinq 

Plants,  1915) 

Cotnpanie$       MunicipaliiiM 

Total  number  of  lamps 11.511  11,621 

(Lamps  in  other  places) (M07)  (633) 

Total  number  of  lamps  actually  in  use 10,783  11,341 

(Lamps  in  other  places) (1,281)  (614) 

Average  wattage  of  lamps ^^  ,«.  ®^  ,« 

Average  C.P.  of  lamps 170  (?)  147  (?) 

Pct*  capita  wattage 3.6  4.7 

Per  capUa  C.P «  4  8.0 

Current  consumed  per  lamp  (K.W.H.) 324 . 0  813 . 0 

Current  consumed  per  capita  (K.W.H.) 12-2  18.1 

Number  of  nights  in  use  per  month 29.7  30.0 

Number  of  hours  in  use  per  night 7.6  9.1 

Number  of  inhabitants  8er^'ed  by  one  lamp 24 . 8  18.1 

Number  of  commercial  customers  to  one  lamp.  2-1  1.6 

Length  of  street  lines  per  capita  (ft.) 25  t8 

Length  of  street  lines  per  lamp  (ft.) 617  511 

Length  of  street  lines  per  customer 80S  828 

Length  of  streets  with  overhead  lines  (commer- 
cial and  street)^  per  lamp 486  299. 

1  Commercial  and  street  lighting  cannot  be  separated. 

1  The  lack  of  correspondence  between  the  average  number  of  hours* 
use  per  night,  as  here  computed  from  the  annual  returns  of  the  various 
plants,  and  the  number  of  hours'  daily  use  of  the  connected  street 
lightmg  load,  as  computed  in  the  preceding  table  (10.4  hours  for  the 
public  plants  and  9.4  for  the  other  group),  must  not  mislead  the  reader. 
This  considerable  difference,  amounting  to  1.3  hours  for  the  former  and 
1.8  hours  for  the  latter,  can  be  accounted  for  in  several  ways.  Fu-st,  in 
the  present  calculation  the  lamps  are  not  weighted  according  to  their 
wattage,  but  according  to  their  number.  As  most  of  the  higher  wattage 


n 


IN  MASSACHUSETTS 


129 


7.  Lines,  Poles,  and  Tbansformers  * 

The  companies  in  1910  served  only  14  foreign  localities, 
while  by  1915  they  had  extended  their  service  to  7  addi- 
tional places.  Likewise  the  municipalities  extended  their 
service  to  4  other  municipaUties  during  the  same  period. 
Yet,  even  if  from  the  list  of  companies  we  omit  Buzzard's 
Bay,  which  was  just  beginning  operation  at  the  earUer 
date,  and  which  has  since  then  taken  4  other  towns  into 
its  district  served,  we  still  find  that  the  increase  shown  by 
the  latter  in  length  of  lines  and  number  of  poles  is  aston- 
ishingly greater  than  that  of  the  former.  Even  more  strik- 
ing is  the  rate  of  increase  of  streets  with  overhead  lines  in 
the  case  of  the  companies. 

The  commercial  lines  for  both  light  and  power  service 
—  and  they  are  usually  not  separated,  as  practically  no 
direct  current  is  used  —  compose  69  per  cent  of  the  total 
in  the  companies  and  62  per  cent  in  the  municipalities.' 
The  total  increase  of  lines  during  the  period  was  for  the 
former  87.3  per  cent  (73  if  Buzzard's  Bay  be  omitted),  and 
for  the  latter  60  per  cent.  In  the  separate  classes  of  service, 
the  increase  in  length  of  commercial  lines  was  115.2  per 
cent  for  the  companies  and  only  76.4  per  cent  for  the 
municipalities,  in  spite  of  the  fact  that  even  at  the  earlier 
date  their  conmiercial  lines  per  customer  were  11  per  cent 

Iamps>were  in  operation  for  the  longer  interval,  this  would  be  almost 
sufficient  to  account  for  the  difference.  Again,  there  are  certain  losses 
between  the  place  where  the  current  is  metered  and  the  lamp  terminal, 
which,  since  they  could  not  be  eliminated  in  computing  the  table,  would 
make  the  kilowatt  hours'  consumption  per  kilowatt  connected  load  some- 
what higher  than  in  reality  it  is.  This,  in  turn,  would  make  the  number 
of  hours'  use  pwr  day  too  high.  Finally,  there  are  doubtless  numerous 
errors  in  the  returns  regarding  the  number  of  hours'  use  of  lamps  per 
night,  and  we  know  nothing  definite  about  the  "outages." 
,,    *  Appendix,  pp.  420-422. 

*  Needless  to  say  the  line  data  are  probably  far  from  accurate  in  both 
groups  of  plants,  doubtless  being  less  accurate  for  the  municipalities;  but 
there  is  no  reason  for  supposing  that  the  group  averages  will  fail  to  show 
the  true  relations  between  the  two. 


I 


ISO 


MUNICIPAL  ELECTRIC  LIGHTING 


i' 


li 


tl 


longer  than  those  of  the  public  plants.  The  street  lighting 
lines,  also,  have  increased  47.4  and  38.7  per  cent  respec- 
tively. Omitting  Buzzard's  Bay,  we  find  that  the  rate  of 
increase  of  street  Hues  has  been  practically  the  same  in 
both  cases,  while  that  for  the  commercial  lines  is  still  more 
than  25  per  cent  ahead  of  the  company  rate.  But  there 
seems  to  be  no  good  reason  for  leaving  out  this  plant,  for 
it  merely  presents  a  case  of  unusually  rapid  growth  from 
small  beginnings. 

The  length  of  streets  with  overhead  lines  has  increased 
almost  twice  as  rapidly  for  the  comjjanies,  65.3  per  cent 
as  opposed  to  37.4  per  cent  in  the  public  plants.  Also  it 
appears  that  there  are  4.6  miles  of  line  to  one  mile  of  over- 
head in  the  companies,  and  4.1  to  each  mile  in  the  public 
plants.  In  1910  the  ratios  were  respectively  4  and  3.6. 
These  and  the  foregoing  data  serve  to  show  that  the 
companies  have  not  only  been  extending  their  facilities 
far  more  liberally  than  have  the  other  group,  but  also 
that  they  have  probably  developed  their  territory  some- 
what better. 

This  development  becomes  still  more  clear  when  we  com- 
pare the  relations  between  length  of  lines,  number  of  cus- 
tomers, and  inhabitants  of  districts  served.  So  far  as  the 
street  lines  are  concerned,  there  has  been  a  considerable 
per  capita  growth  in  both  cases,  but  more  marked  for  the 
municipalities.  Absolutely,  the  latter  are  still  in  the  lead, 
with  29  feet  per  capita  as  compared  with  24  feet  in  the 
companies.  Evidently  the  public  plants  have  been  devel- 
oping their  street  lighting  with  greater  zeal  than  their 
commercial  business. 

It  is,  however,  the  commercial  lines  that  most  concern 
us,  and  here  we  find  that  the  length  per  customer  has  de- 
creased 7.3  per  cent  for  the  mimicipahties,  and  has  in- 
creased 6  per  cent  for  the  other  group,  or  has  remained 
almost  stationary  if  Buzzard's  Bay  be  omitted.  Accord- 
ingly, the  length  of  lines  per  customer  is  26.5  per  cent 


IN  MASSACHUSETTS 


ISl 


greater  in  the  companies  (678  feet)  than  in  the  public 
plants  (536  feet,  or  471  including  Holyoke).  In  other 
words,  the  number  of  customers  per  mile  of  fine  has  been 
increasing  for  the  latter  group,  from  9.13  to  9.85,  or  7.9 
per  cent,  and  decreasing  for  the  former,  from  8.25  to  7.80, 
or  5.5  per  cent.  Had  we  no  other  data  at  our  command, 
these  figures  might  seem  to  make  a  bad  showing  for  the 
companies,  since  they  would  appear  to  indicate  that  the 
territory  served  is  not  being  so  well  developed.  But,  when 
we  know  that  the  area  served  by  them  is  much  greater, 
that  their  lines  have  been  extended  more  rapidly,  and  that 
the  rate  of  increase  of  their  customers  has  also  been  faster 
than  in  the  other  group,  it  becomes  evident  that  such  is 
not  the  case.  In  fact,  the  opposite  would  seem  to  be  true. 
Yet  the  condition  indicates  that  there  has  been  a  much 
larger  investment  in  lines  per  customer  in  the  companies, 
which,  other  things  being  equal,  would  be  reflected  in  higher 
charges  for  service.  This  aspect  of  the  subject  will  be  dealt 
with  in  the  following  chapter. 

Again,  it  is  instructive,  though  not  conclusive,  to  note 
that  the  number  of  inhabitants  per  mile  of  overhead  lines 
(both  commercial  and  street)  has  decreased  only  17.6  per 
cent  for  the  municipalities,  from  322  to  267,  while  the 
decrease  for  the  other  group  has  been  from  433  to  301,  or 
30.5  per  cent.  Also,  the  number  of  customers  per  mile  of 
overhead  is  24.8  in  the  pubUc  plants  and  24.7  in  the  com- 
panies. The  first  set  of  figures  indicates  an  extension  of 
lines  more  rapid  than  the  growth  of  population,  particu- 
larly on  the  part  of  the  private  plants,  which  are  now  evi- 
dently as  well  equipped  to  serve  their  far  more  extensive 
territory  as  are  the  municipal  plants.  The  small  per  capita 
advantage  in  favor  of  the  latter  is  to  be  expected  in  view 
of  the  more  restricted  area  served. 

It  may  be  argued  by  some  that  the  greater  relative  length 
of  lines  in  the  companies  is  due  to  the  fact  that  they  have 
failed  to  write  off  their  "dead"  wire.  The  data  studied  for 


132 


MUNICIPAL  ELECTRIC  LIGHTING 


j 


only  one  year  might  seem  to  confirm  this  supposition.  But, 
having  found  so  marked  a  growth  during  the  five-year 
period,  both  in  lines  and  in  streets  with  overhead  lines,  the 
writer  puts  little  credence  in  this  theory.  The  faxits,  so  far 
as  discoverable,  all  refute  this  contention. 

Finally,  before  leaving  the  subject  of  lines,  attention 
must  be  directed  to  another  striking  development  found 
in  the  companies  and  not  met  with  in  the  municipal  plants, 
namely,  the  increasing  utilization  of  underground  construc- 
tion.  In  1910  our  group  of  private  plants  returned  a  total 
of  3.5  miles  of  conduits,  with  4.2  miles  of  cable,  which  in 
1915  had  increased  to  21.1  miles  of  conduit,  with  123.3 
miles  of  cable  therein.   By  far  the  greater  portion  of  this 
imderground  construction  is  accounted  for  by  the  two 
companies  of  Beveriy  and  Gloucester.    The  municipal 
return  forms  do  not  even  provide  a  place  for  recording  the 
length  of  conduits,  and,  so  far  as  the  writer  is  informed, 
none  of  these  plants,  with  the  exception  of  Holyoke,  which 
boasts  several  thousand  feet,  have  any  underground  con- 
struction whatever.   Owing  to  the  high  cost  of  such  con- 
struction we  would  naturally  expect  an  investment  in  lines 
relatively  much  greater  for  the  companies. 

We  find  the  same  interesting  development  in  the  number 
of  poles,  the  increase  for  the  companies  being  76.2  per  cent 
and  for  the  public  plants  only  28.7  per  cent,  commensurate 
with  their  increase  in  overhead.  If  Buzzard's  Bay  be  de- 
ducted, the  former  increase  becomes  61.6  per  cent.  Further- 
more, there  are  a  few  poles  "jointly  owned"  reported  by 
the  private  plants  and  a  few  "rights  of  attaching,"  which 
are  customarily  charged  against  the  capital  account  and 
may  in  a  very  literal  sense  be  regarded  as  part  of  their 
property.  Even  when  all  of  these  are  deducted,  we  still 
find  that  the  increase  in  number  is  more  than  twice  as 
rapid  for  the  companies  as  for  the  municipalities.  At 
present  twice  as  many  poles  per  plant  are  owned  by  the 
former  as  by  the  latter.  Also,  the  reported  number  of  poles 


IN  MASSACHUSETTS 


ISS 


per  mile  of  line  is  found  to  be  10.4  for  the  private  plants 
and  7.8  for  the  others,  while  the  number  of  poles  per  mile 
of  overhead  is  47.5  and  35  respectively.^ 

What  is  the  meanmg  of  this  marked  discrepancy?  It 
is,  to  be  sure,  partially  a  result  of  the  more  conservative 
extension  policy  of  the  public  plants.  However,  it  is  more 
largely  accounted  for  by  the  fact  that  they  are  attaching 
their  wires  to  every  support  available,  to  telephone  and 
telegraph  poles,  to  street  railway  poles,  and  to  trees,  —  and, 
by  the  way,  the  latter  fact  may  account  in  some  mea- 
sure for  their  greater  loss  of  current  in  distribution.  While 
three  companies  report  a  comparatively  small  number  of 
jointly  owned  poles,  and  two  plead  guilty  of  using  a  few 
hitches  on  trees,  13  out  of  17  municipalities  report  the  use 
of  foreign  poles,  not  to  mention  trees.  Of  this  number,  5 
^ve  definite  figures,  and  8  simply  state  that  they  use  for- 
eign supports  whenever  possible  or  that  they  do  not  know 
the  number.  And,  furthermore,  they  neither  pay  rental 
for  the  privilege  of  attaching,  with  the  one  exception  of 
Concord,  nor,  so  far  as  the  writer  can  discover,  have  they 
ever  entered  any  charge  against  theu*  capital  account.  It 
is  pure  gain  for  the  mimicipalities,  resulting  from  the  pro- 
visions of  the  franchises  which  they  have  granted.  In  a 
test  case  the  Supreme  Court  of  the  State  has  upheld  the 
practice  as  being  within  the  "police  power  "  of  the  muni- 
cipalities. ^  But,  while  they  can  secure  this  free  service 
ad  libitum  and  so  save  a  large  capital  investment,  they  are 
at  perfect  liberty  to  rent  their  own  poles,  and  four  of  them 
report  a  goodly  income  from  this  source  during  the  year. 
On  the  other  hand,  while  the  mayor  and  aldermen  or  the 

1  The  returns  are  probably  inaccurate  on  this  pomt,  in  many  cases, 
and  it  may  be  that  some  of  the  companies  have  claimed  as  their  own,  poles 
which  do  not  really  belong  to  them.  There  is,  however,  not  much  reason 
for  thinking  the  errors  are  greater  for  the  private  plants  than  for  the 
public. 

*  Postal  Telegraph  Cable  Company  of  Massachusetts  w.  City  of  Chico- 
pee,  207  Mass.  341.  Cf.  also  Mass.  R.L..  xxv:  52. 


I 


'. 


I  ■ 


? 


134 


MUNICIPAL  ELECTRIC  LIGHTING 


selectmen  may  grant  a  private  concern  the  privilege  of 
attaching  wires  to  the  poles  of  other  private  concerns  or 
to  the  municipal  poles,  it  is  understood  that  a  reasonable 
compensation  shall  be  paid  therefor.^ 

Finally,  the  rate  of  increase  in  number  of  line  trans- 
formers has  been  practically  the  same  for  both,  44.8  per 
cent  in  the  pubhc  plants  and  41 .2  per  cent  in  the  companies, 
while  the  number  of  customers  per  transformer  is  also  the 
same,  6.4  and  6.3  respectively,  —  a  condition  which  obvi- 
ously may  suggest  similar  line  engineering.  Aside  from  the 
mere  mention  of  the  fact  that  practically  all  of  the  service 
is  now  metered,  even  the  contract  service,  it  is  not  worth 
while  to  study  the  subject  of  meters,  which  may  or  may  not 
coincide  with  the  number  of  customers.  (On  the  subject 
of  transformers  the  reader  is  referred  to  the  above  discus- 
sion of  current  imaccounted  for.) 

8.  Physical  Statistics  op  Purchasing  Plants  • 

The  more  important  physical  features  of  our  group  of 
purchasing  plants  will  be  reviewed  but  briefly,  since,  for 
reasons  which  have  already  been  considered,  it  does  not 
seem  worth  our  while  to  attempt  any  comparisons  with 
the  year  1910.  So  far  as  the  output  of  current  is  concerned, 
practically  the  same  relaticms  are  found  in  this  group  as  in 
the  group  of  generating  plants.  The  companies  purchase 
on  the  average  266,715  kilowatt  hours,  about  70  per  cent 
more  than  the  average  public  plant  (157,173  K.W.H.). 
Norwood  is  omitted  from  the  general  comparison  for  the 
same  reason  that  Holyoke  was  omitted  from  the  other 
group.  No  load  factor  analysis  has  been  attempted  be- 
cause, as  has  previously  been  stated,  the  municipal  plants, 
with  only  two  or  three  exceptions,  return  no  data  which 
would  enable  the  computation  to  be  made.  For  the 
8  companies  which  give  some  meager  information  regarding 

1  Mass.  R.  L.,  XXV :  52;  and  1911,  ch.  509,  sect.  2.  See  ch.  xi,  p.  306. 
'  Appendix,  pp.  460-4d5. 


\  , 


IN  MASSACHUSETTS 


185 


their  peak  load,  it  appears  that  the  average  load  factor  is 
probably  about  20.  It  will  naturally  run  somewhat  lower 
for  the  municipal  plants,  as  their  power  business  is  propor- 
tionally smaller. 

In  the  matter  of  distribution  efficiency  the  public  plants 
have  some  advantage,  inasmuch  as  their  current  used  at 
station  and  unaccounted  for  is  only  22.7  per  cent  of  the 
total  output,  while  that  of  the  companies  is  24.5  or  pro- 
portionately 8  per  cent  higher.  This,  however,  is  not  in 
itself  a  very  significant  difference,  and  can  probably  be 
largely  accounted  for  by  the  fact  that  the  public  plants 
have  in  general  a  much  newer  distributing  system. 

Upon  an  examination  of  the  average  size  of  transformers 
and  the  distribution  of  the  different  sizes,  it  appears  that 
the  municipal  plants  have  an  average  of  only  3  K.W., 
which  is  far  below  the  companies*  average  of  5.60  K.W. 
Also,  sUghtly  more  than  half  of  the  transformers  of  the 
former  (51.9  per  cent)  are  of  the  1  K.W.  size  or  under, 
while  less  than  one  fourth  (22.5  per  cent)  of  the  total 
number  of  the  latter  are  so  small.  The  table  shows  these 
relations: 


Table  23.  Transformeb  Data 

(PuBCHAsiNQ  Plants,  1915) 

CUu9  t^  plant 

size 
{.K.W,) 

Fereentage  ditinbuiion  of  the  dijferent  rizu  aS  line 
brans/ormers 

I  K.W. 

or  leu 

l+to 
SK.W. 

S±to 
6  K.W. 

54- to 
10K.W. 

Over 
10  K.W. 

IVfiinirinal 

3.00 
5.60 

51.9 
22.5 

24.1 

28.4 

12.2 
24.0 

7.3 
14.0 

4.3 

Company  ■,-,■, 

11.3 

Other  things  being  equal,  we  would  accordingly  expect 
to  find  a  considerably  smaller  amount  of  current  unac- 
counted for  in  the  companies.  But  it  must  be  remembered 
that,  inasmuch  as  these  plants  are  much  older  than  the  other 
group,  their  transformers  may  be  in  many  cases  antiquated. 


196 


MUNICIPAL  ELECTRIC  LIGHTING 


r 
I, 


ii 


As  might  be  expected  under  the  circumstances,  the 
private  plants  have  a  marked  advantage  in  the  extent  of 
their  power  business.  They  sell  more  than  twice  as  great 
a  percentage  for  this  purpose  (31.3  per  cent  of  the  total 
sales)  as  do  the  other  group  (13.9  per  cent).  It  is  absolutely 
certain,  however,  that  the  municipal  returns  are  hopelessly 
inaccurate  on  this  point.  Four  report  power  customers  and 
no  motors,  one  reports  customers  and  no  sales,  and  one 
(Shrewsbury)  returns  60  customers,  60  motors,  and  sales 
to  the  extent  of  2,113  kilowatt  hours!  With  the  exception 
of  the  Norwood  plant,  which  is  in  a  manufacturing  center, 
and  Wellesley,  which  sells  a  considerable  quantity  of  cur- 
rent to  its  water  department,  most  of  the  public  plants 
seem  to  have  a  comparatively  small  opportunity  to  develop 
a  good  power  business.  The  chief  function  of  the  majority 
of  this  group  seems  to  be  to  light  the  streets  and  supply 
the  residences. 

It  is  somewhat  surprising  to  find  that  the  number  of 
kilowatt  hours  supplied  per  capita  is  36.8  in  the  companies 
and  45.5,  or  24  per  cent  higher,  in  the  municipal  plants. 
This  is  an  unusually  good  showing  for  the  latter,  since  the 
density  of  population  in  the  territory  served  by  them 
(136.7  per  square  mile)  is  conspicuously  less  than  that  of 
the  territory  served  by  the  other  group  (218.2).  There 
seems  to  be  no  denying  the  fact  that  they  have  developed 
their  trade  in  a  remarkable  manner,  considering  how 
recently  they  have  entered  the  field.  It  is  also  interesting 
to  note  that  the  per  capita  consumption  of  current  for 
street  lighting  is  nearly  twice  as  great  in  the  public  plants 
(14.2  K.W.H.)  as  in  the  private  plants  (7.8  K.W.H.),  while 
their  per  capita  power  sales  (6.3  K.W.H.)  are  little  more 
than  half  those  of  the  latter.  But,  as  intimated,  these  last 
figures  are  probably  somewhat  too  low  for  the  municipal 
plants. 

Though  the  companies  do  a  two  thirds  larger  business 
than  the  other  group,  they  have  only  30  per  cent  more 


IN  MASSACHUSETTS 


137 


customers  (376  as  compared  with  289).  This  of  course 
suggests  larger  sales  per  customer,  which  we  find  to  be 
410  kilowatt  hours,  or  about  50  per  cent  higher  than  the 
sales  of  the  municipal  plants  (280  K.W.H.) ,  including,  of 
course,  only  the  light  and  power  sales.  It  appears  that  in 
each  group  the  ratio  of  power  customers  to  light  customers 
is  practically  the  same  —  5.4  per  cent  in  the  public  plants 
and  5.2  per  cent  in  the  companies.  The  quantity  of  current 
used  for  light  per  customefr  is  224  hours  in  the  former  and 
250  in  the  latter,  while  the  average  power  sold  per  customer 
is  respectively  1087  (only  724  if  the  Wellesley  waterworks, 
which  accounts  for  one  third  of  the  total,  be  omitted)  and 
8,306  kilowatt  hours.  Probably  the  figure  for  the  former 
would  be  somewhat  higher  than  here  given,  were  it  not  for 
the  fact  that  a  portion  of  the  current  sold  for  power  is  not 
separated  from  the  commercial  lighting  sales.  Also  the 
municipalities  seem  to  have  reported  as  power  customers 
some  who  have  no  motors  and  are  using  only  those  appli- 
ances which  would  ordinarily  be  classed  with  the  fighting 

load. 

Finally,  the  ratio  of  customers  to  inhabitants  of  the 
district  served  is  only  6.9  per  cent  in  the  companies  and 
about  60  per  cent  higher,  10.8  per  cent,  in  the  public  plants. 
This  is  surely  an  excellent  showing  for  the  latter,  in  view 
of  the  fact  that  their  population  is  more  scattering  than 
that  of  the  other  group,  even  though  their  area  is  not  quite 
so  extensive  (19.6  square  miles  as  opposed  to  25.8  for  the 
companies). 

The  accompanying  table  explains  the  more  significant 
relations  which  exist  between  the  connected  loads  of  the 
two  groups,  though,  to  be  sure,  with  the  exception  of  the 
street  fighting  data,  the  figures  must  be  taken  with  cau- 
tion. Probably  the  inaccuracies  are  about  as  great  in  one 
case  as  in  the  other.  At  any  rate  the  per  capita  showing 
seems  to  be  markedly  better  for  the  municipal  plants.  This, 
together  with  the  fact  that  their  sales  per  customer  are 


1* 


138  MUNICIPAL  ELECTRIC  LIGHTING 

much  lower  than  in  the  private  plants,  indicates  that  their 
entire  territory  is  more  adequately  supplied.  It  might  also 
lead  us  to  expect  higher  charges  for  service,  because  of  the 
greater  expense  involved.  The  jwwer  load  of  the  public 
plants,  so  far  as  developed,  seems  to  be  about  as  satisfac- 
tory as  that  of  the  other  group.  % 

Table  24.    Connected  Load  Data  (Purchasing 

Plants,  1915) 

Companiea  Municipal 

Average  per  plant  (K.W.) 620.0  SdO.5 

Per  capita  (watts) 89  122 

Street  lighting  load  per  capita  (watts) 2.3  5.5 

Per  customer  (K.W.) 

Light 0.9U  1.000 

Power 7.600  2.470 

Average  number  of  motors  per  plant 88  19 

Average  size  of  motors  per  plant  (K.W.)  S.8S0  2.200 
Consumption  of  current  (K.W.H.)  per  kilowatt 
connected  load 

Total 416  857 

Commercial  lighting 278  237 

Power 484  400 

Street  lighting 8491  2615 

It  is  further  interesting  to  observe  that,  while  the  con- 
nected street  Ughting  load  per  capita  is  almost  two  and 
one  half  times  as  great  for  the  mmiicipal  plants  as  for  the 
companies,  the  consumption  of  current  per  connected  load 
(2,615  K.W.H.)  is  only  about  three  fourths  as  high  as  in 
the  other  group  (3,491  K.W.H.).  This  simply  indicates 
that  while  the  former  are  better  suppHed  with  lamps,  they 
are  not  using  them  on  the  average  so  many  hours  per 
night.  The  data  here  computed  would  indicate  an  average  of 
7.2  hours  use  per  night  for  every  night  in  the  year,  in  the 
public  plants,  and  9.6  hours  per  night  in  the  private  plants. 

A  study  of  the  distributing  system  of  the  two  groups  is 
particularly  instructive.  The  average  length  of  Unes  per 
public  plant  is  72.9  miles,  sHghtly  higher  than  that  of  the 
other  group,  68.7,^  but  the  length,  per  plant,  of  streets 

^  If  Manchester  be  omitted,  since  aU  of  its  coDStruction  is  under- 
ground»  the  length  becomes  71.6  miles. 


IN  MASSACHUSETTS 


1^ 


with  overhead  lines  is  almost  50  per  cent  greater  in  the 
former  (21.4  miles)  than  in  the  latter  (14.8  miles).  It  natu- 
rally follows  that  the  miles  of  line  per  mile  of  overhead  are 
less  in  the  former  (3.6)  than  in  the  latter  (4.6).  The  num- 
ber of  people  per  mile  of  streets  with  overhead  is  139  m 
the  municipal  plants  and  370  in  the  companies.  Obviously 
the  former  have  made  a  much  more  effective  attempt  to 
serve  their  territory  than  have  the  other  group. 

Upon  separating  the  street  lighting  lines  from  the  com- 
mercial lines,  we  find  that  these  constitute  31.4  per  cent 
of  the  total  length  in  the  companies  and  34.3  per  cent  in 
the  mimicipal  plants,  or,  on  the  average,  23  and  29.4  miles 
per  plant  respectively.  This  indicates  that  the  latter  are 
showing  just  as  much  zeal  in  the  development  of  their 
commercial  business  as  are  the  private  plants.  But,  while 
the  length  of  the  street  Ughting  lines  per  capita  is  in  the 
companies  only  21  feet,  it  is  in  the  other  group  52  feet! 
Obviously  the  little  municipalities  are  intending  to  light 
themselves  at  any  cost!  Furthermore,  the  length  of  com- 
mercial lines  per  customer  is  in  the  case  of  the  companies 
660  feet,  and  in  the  public  plants  880  feet.  In  other  words, 
there  are  8  customers  per  mile  of  line  in  the  one  and  onljr 
6  in  the  other. 

The  number  of  poles  is  794  per  plant  for  the  municipali- 
ties and  792  for  the  companies.  The  number  per  mile  of 
overhead,  however,  is  only  37  in  the  former  and  54  in  the 
latter.^  But  the  number  per  mile  of  hne  is  exactly  the  same, 
11,  in  each  case.  Hence  it  would  appear  that  the  com- 
panies are  building  a  more  substantial  line  construction 
and  probably  own  a  larger  proportion  of  their  poles. 

Practically  all  of  these  data  indicate  that  the  actual 
investment  in  physical  equipment  for  the  sake  of  serving 
the  customcKs  would,  other  things  being  equal,  be  much 
greater  in  the  municipal  plants  than  in  the  companies,  — 
a  fact  which  under  private  management  would  lead  us  to 

'  Manchester  omitted. 


t 


I 


isi 


. 


140 


MUNICIPAL  ELECTRIC  LIGHTING 


expect  higher  rates,  since  their  load  factor  is  apparently 
poorer.  From  the  statistical  point  of  view,  at  any  rate,  it 
appears  to  be  demonstrated  beyond  a  doubt  that  the 
pubHc  plants  have  had  a  more  difficult  territory  to  serve 
—  a  territory  which  did  not  attract  private  enterprise  — 
and  have  developed  that  territory  remarkably  well.  They 
appear  to  have  made  a  far  better  showing  with  less  oppor- 
tunity than  have  the  corresponding  group  of  companies. 
Here,  apparently,  is  a  complete  reversal  of  the  situation 
which  was  found  in  the  group  of  generating  plants,  of 
which  more  mention  will  be  made  presently. 

While  little  reference  has  been  made  to  the  municipal 
plant  of  Norwood,  it  may  be  stated  briefly  that,  so  far  as 
our  study  has  gone,  it  has  done  unusually  well.  This  good 
record  can  be  attributed  to  three  causes:  (1)  As  in  the  case 
of  Holyoke,  it  serves  a  compact  and  densely  populated 
territory  (10.47  square  miles),  to  which  its  business  has 
been  confined.  (2)  It  is  in  an  active  manufacturing  center, 
• —  more  than  half  of  its  current  is  sold  for  power  purposes. 
And  (3)  due  to  the  influence  of  certain  public  spirited  citi- 
zens, the  electric  plant,  as  well  as  all  of  the  municipal 
affairs,  has  recently  been  managed  remarkably  well. 

9.  Extent  of  Territory,  Roads,  and  Population  ^ 

In  a  study  of  this  sort  it  would  be  highly  instructive  to 
know  the  exact  area  of  the  territory  actually  served  by 
each  group  of  plants,  as  well  as  the  density  of  population 
of  that  area,  and  the  length  of  roads.  Certain  significant 
relations  could  thus  be  worked  out  regarding  the  develop- 
ment of  the  district  served.  Some  attempt  has  already 
been  made  in  this  investigation  to  deduce  such  relations, 
based  on  the  total  number  of  inhabitants  in  each  city  and 
town  and  the  total  inhabitable  areas.  The  results  are  val- 
uable as  showing  certain  general  tendencies.  They  must, 
however,  be  taken  with  a  good  deal  of  caution. 

^  Appendix,  pp.  404-405.  423. 


IN  IVLiSSACHUSETTS 


141 


It  is  absolutely  impossible  to  secure  exact  data  on  these 
points.  Only  within  the  last  year  ha^  the  aetual  area  of  the 
State  of  Massaehusetts  been  known,  and  not  until  a  short 
time  ago  (in  1916)  was  it  possible  to  find  out  the  net  land 
areas  of  the  various  municipalities.  Nor  ^re  these  figures 
at  present  published  or  in  process  of  being  Published  The 
writer  ha^  ferreted  them  out  of  the  archives  of  the  Massa- 
chusetts Waterways  and  PubUc  Lands  Commission  (for- 
merly the  Board  of  Harbor  and  Land  Commissioners),  and 
has  made  his  own  computations  therefrom. 

A  city  or  town  in  Massachusetts  may  extend  over  a  very 
considerable  territory,  while  its  population  may  be  con- 
centrated  in  one  small  portion  of  that  area.  On  the  other 
hand,  notably  in  the  smaller  towns,  the  inhabitant  may 
be  more  evenly  distributed  throughout  the  entire  distnct. 
We  should  have  some  means  of  distinguishing  business 
and  residential  sections  from  purely  rural  districts,  ss  to 
area,  population,  and  length  of  roaxis.  If  the  aereage  of  aU 
"agricultural"  lands  had  been  correctly  reported  m  the 
State  Census  of  1905,  if  there  had  been  Uttle  change  m  this 
acreage  since  then,  and  if  the  total  assessed  aereage  of  each 
municipaUty,  a^  at  present  reported  to  the  Tax  Commis- 
sioner, were  accurate,  it  would  be  possible,  by  subtraeting 
the  one  from  the  other,  to  find  the  urban  areas  with  sulti- 
cient  accuracy  for  our  purposes,  particularly  in  the  ca^ 
of  the  plants  which  do  no  business  in  foreign  localities. 
Upon  comparison,  however,  the  discrepancies  have  been 
found  to  be  so  great  that  this  method  is  out  of  the 

question.  .,   , 

The  statistics  of  agriculture  in  Massachusetts,  compiled 
by  the  Federal  Census  Bureau  as  of  April  15, 1910,  would, 
if  correct,  give  us  the  areas  desired.  The  farm  acreage 
reported,  however,  is  in  many  ca^s  merely  an  estimate 
and,  besides,  only  totals  for  counties  are  given.  To  fand 
1  Abstract,  U.S.  Census,  1910  (with  Supplement  for  Massachusetts): 
613,  62&-631. 


142 


MUNICIPAL  ELECTRIC  LIGHTING 


the  data  for  our  particular  groups  of  municipalities  would 
necessitate  the  enormous  and  probably  fruitless  task  of 
working  over  all  of  the  raw  material  on  which  the  census 
was  based. 

Probably  the  only  satisfactory  way  to  secure  these  data 
is  to  visit  the  locahties  studied,  and  from  the  plans  kept 
by  the  municipal  authorities,  when  there  are  such,  com- 
pute the  areas  in  question,  and  determine  the  length  of 
roads.  Nor,  in  the  case  of  the  smaller  to\\Tis,  would  even 
these  figures  be  worth  much,  for  electrical  service  is  fre- 
quently extended  far  into  the  rural  districts.  The  Massa- 
chusetts State  Forester  is  at  present  engaged  upon  just 
such  a  survey  as  would  be  useful  on  this  matter,  and  has, 
to  date,  covered  Worcester  County  and  is  working  on 
Plymouth  County.  But  it  will  be  many  years  before  the 
State  is  covered. 

Again,  the  Massachusetts  State  Highway  Commission, 
for  the  year  1914,  coHccted  data  regarding  the  length  of 
roads  in  the  separate -cities  and  towns.   As  these  figures 
were  based  largely  on  returns  made  by  the  local  authorities 
they  were  at  first,  in  some  cases,  distressingly  inaccurate. 
The  Commission,  however,  by  carefully  checking  up  the 
returns  with  the  United  States  Geological  Survey  maps 
and  with  other  data  at  their  command,  as  well  as  by  per- 
sonal verification  in  many  instances,  managed  to  correct 
the  more  serious  mistakes,  so  that  the  percentage  of  error, 
according  to  the  chief  engineer  is  certainly  not  greater 
than  10  per  cent.  Yet,  except  to  give  the  estimated  length 
of  improved  and  unimproved  roads  for  the  entire  munici- 
pahty,  no  data  are  worked  out  which  can  be  of  much  serv- 
ice to  us.    A  crude  approximation  of  the  length  of  roads 
in  the  thickly  settled  districts  could  be  reached  by  going 
over  the  large  Geological  Survey  maps  and  making  com- 
putations by  means  of  tedious  measurements.    As  the 
Director  of  the  Survey  has  informed  the  writer  that  these 
maps  are  twenty  years  old,  and  hence  probably  very  far 


IN  MASSACHUSETTS 


14S 


from  accurate  at  the  present  date,  doubtless  the  results 
thus  secured  would  still  be  unsatisfactory. 

Taking  the  totals  as  we  find  them,  it  is  instructive  to 
note  that  the  average  land  area  of  the  districts  served  by 
the  generating  companies  is  58.94  square  miles,  or  136  per 
cent  greater  than  that  served  by  the  public  generating 
plants  (24.81  square  miles).  If,  however,  the  foreign  locali- 
ties be  eliminated  in  each  case,  the  averages  become  respec- 
tively 30.67  and  21.39  square  miles,  the  companies  still 
being  43.4  per  cent  in  the  lead.  In  the  purchasing  plants 
there  is  not  so  marked  a  difference,  as  the  area  per  public 
plant  is  19.60  square  miles  and  per  private  plant,  25.06. 
The  greater  area  in  the  latter  is  wholly  accounted  for  by 
the  fact  that  six  foreign  localities  are  served. 

The  average  length  of  roads  of  all  kinds  for  the  municipal 
generating  plants  is  83  miles  and  for  the  corresponding 
companies  172  miles.  The  population  per  mile  of  road  is 
in  the  former  146  and  in  the  latter  only  98.  For  the  pur- 
chasing plants,  on  the  contrary,  the  tables  are  turned. 
While  the  average  length  of  roads  is  66  miles  in  the  com- 
panies and  58  in  the  municipalities,  the  number  of  inhabit- 
ants per  mile  of  road  is  83  in  the  former  and  only  45  in  the 
latter,  if  Norwood  be  omitted.  Under  the  circumstances 
it  is  probably  not  worth  our  while  to  work  out  any  rela- 
tions between  amount  of  business  done  and  length  of  lines 
on  the  one  hand,  and  areas  of  districts  served  and  length 
of  roads  on  the  other  hand,  for  we  know  too  Uttle  about 
the  distribution  of  service  in  the  individual  plants. 

Regarding  the  separation  of  rural  and  urban  population 
similar  difficulties  as  above  outlined  present  themselves. 
As  the  United  States  Census  classes  all  places  with  less 
than  2,500  population  as  riu-al,^  the  data  there  found  are 
of  absolutely  no  use  in  the  study  of  our  towns  and  cities, 
owing  to  the  peculiar  meaning  attached  to  those  terms  in 
Massachusetts.   Country  dwellers  are  not  here  separated 

»  Abstract,  U.S.  Census,  1910:  54. 


i 


144 


MUNICIPAL  ELECTRIC  LIGHTING 


f 


lir 


1 


from  those  in  the  thickly  settled  districts.  However,  by 
finding  the  number  of  "farms"  in  each  municipality  (in- 
cluding "general"  farms,  dairy  farms,  egg  and  poultry 
farms,  and  sometimes  market  gardens),  as  given  in  the 
Massachusetts  State  Census  of  1905,  checking  this  number 
up  with  the  number  of  farm  dwellings  then  reported,  and 
assuming  that  there  are  on  the  average  about  4.5  j)ersons 
to  each  inhabited  farm,^  we  can  by  a  process  of  simple  mul- 
tipHcation  arrive  at  a  rough  approximation  of  the  number 
of  the  rural  population  in  each  case.  Of  course,  some  of 
the  farms  will  be  inhabited  only  in  the  summer,  and  so  our 
figures  will  be  to  that  extent  misleading.  It  might  be  safer 
to  take  only  the  "general"  farms,  as  many  of  the  others 
may  be  practically  part  of  the  "residential  district,"  and 
to  assume  only  4  dwellers  to  each  farm;  but  this  would 
not  have  any  marked  effect  on  our  averages.  There  are 
numerous  methods  of  verifying  the  number  of  persons  per 
farm,  if  we  could  only  be  certain  of  the  number  of  the 
latter  which  are  actually  inhabited  throughout  the  year. 
Yet  the  errors  are  probably  pretty  evenly  distributed  be- 
tween the  two  groups,  though  only  by  a  first-hand  study 
of  each  locality  can  the  exact  conditions  be  determined.* 

Having  made  the  computations  referred  to,  however, 
assuming  4.5  persons  per  farm,  the  writer  finds  that  the 
total  population  of  the  cities  and  towns  served  by  the 
municipal  generating  plants  (Holyoke  omitted)  is  reduced 
by  11,709,  so  that  the  average  per  plant  becomes  11,424, 
or  5.7  per  cent  less  than  the  former  figure  of  12,113.  For 
the  private  generating  plants  we  would  have  to  deduct 
21,852  or  7.7  per  cent,  which  makes  the  average  15,532, 
instead  of  16,817.   We  would  naturally  expect  this  larger 

»  Abstract,  U.S.  Census,  1910:  260;  and  Mass.  Census,  1905,  iv:  31»- 
323,  407-484. 

*  It  would  be  of  some  value  to  go  carefully  over  the  charts  of  the  differ- 
ent enumerators'  districts  as  outlined  by  the  State  Census  Bureau.  In 
the  case  of  the  smaller  towns,  however,  even  this  would  not  give  us  the 
necessary  groupings  of  population. 


IN  MASSACHUSETTS 


145 


proportion  of  rural  dwellers  in  the  latter  because  of  the 
much  wider  extent  of  territory  served.  Eliminating  the 
foreign  localities,  which  are,  as  a  rule,  not  densely  popu- 
lated, we  find  the  number  of  rural  inhabitants  to  be  about 
equal  in  the  two  groups. 

By  similar  computations  it  appears  that  from  the  total 
number  of  inhabitants  of  the  districts  served  by  the  pur- 
chasing companies  we  must  deduct  10,233,  or  11.7  per  cent, 
so  that  the  average  per  plant  is  reduced  from  5,467  to  4,827. 
The  population  of  the  other  group,  however,  is  decreased 
by  12,037,  or  22.5  per  cent,  until  the  average  per  plant 
falls  to  2,077,  whereas  it  was  2,679.  Though  the  absolute 
decrease  in  number  is  practically  the  same  in  either  case, 
it  is  interesting  to  observe  that  the  percentage  of  coun- 
try dwellers  is  twice  as  great  in  the  districts  served  by 
the  public  purchasing  plants  as  in  the  districts  served 
by  the  other  group.  In  making  all  of  his  computations, 
however,  the  writer  has  used  the  total  population  in  eaeh 
case.  If  the  explanations  just  given  are  borne  in  mind,  it 
hardly  seems  necessary  to  change  the  figures,  certainly  not 
in  the  case  of  the  two  groups  of  generating  plants. 

In  spite  of  the  individual  differences  which  will  naturally 
exist,  it  b  rather  surprising  to  find  the  growth  of  population 
during  the  five-year  period  as  nearly  as  may  be  equal,  14.6 
per  cent  in  the  municipalities  with  generating  plants,  or 
11.8  per  cent  including  Holyoke,  and  14.7  per  cent  in  the 
corresponding  companies.  Having  deducted  the  increase 
in  population  due  to  the  extension  of  service  to  neighboring 
towns,  of  which  there  are  7  in  the  private  plants  and  4  in 
the  pubHc,  we  find  the  rate  of  growth  still  to  remain  prac- 
tically the  same  in  each  case,  though  lowered  to  about  11 
per  cent,  or  to  9.4  per  cent  for  the  public  plants  if  Holyoke 
be  included.  Other  thmgs  being  equal,  this  would  seem  to 
refute  the  arguments  of  those  who  maintain  that  public 
plants,  as  a  result  of  ultra  conservatism,  tend  to  drive 
away  business  and  so  retard  the  growth  of  their  communi- 


i4e 


MUNICIPAL  ELECTRIC  LIGHTING 


ties.  Yet,  when  we  recall  the  fact  that  the  publicly  owned 
plants  are  for  the  most  part  located  in  places  which  are 
devoted  largely  to  manufacture,  while  the  private  plants 
are  found  mostly  in  residential  districts,  we  might  reason- 
ably ask  why  their  population  has  not  increased  much 
more  rapidly  than  that  of  the  second  group.  It  may  be 
worthy  of  note  that,  on  the  one  hand,  the  manufacturing 
city  of  Holyoke  has  grown  only  5.4  per  cent  in  numbers, 
while,  on  the  other  hand,  the  semi-residential  city  of 
Quincy  has  had  a  24  per  cent  increase  during  the  same 
period,  in  spite  of  the  fact  that  the  latter  has  a  much  higher 
tax  rate.  This,  however,  may  be  in  large  measure  due  to 
its  close  location  to  Boston. 

Two  of  the  private  generating  plants,  Attleborough  and 
Leominster,  show  a  slight  decrease  in  population  served, 
due  to  the  fact  that  in  each  case  a  small  neighboring  town, 
whose  inhabitants  formerly  secured  their  current  from 
these  companies,  is  now  independently  ^supplied.  One  of 
these  towns,  Lunenburg,  now  has  a  municipal  plant,  while 
the  other,  Seekonk,  is  served  by  a  private  concern.  A  third 
company.  North  Adams,  shows  a  decrease  of  a  few  inhab- 
itants which  the  writer  is  unable  to  account  for.  Of  the 
similar  group  of  public  plants,  two,  Merrimac  and  North 
Attleborough,  have  also  experienced  some  falling  off  in  the 
number  of  inhabitants  in  their  territory. 

The  groups  of  plants  purchasing  current  show  an  increase 
of  population  served  of  7.3  per  cent  for  the  14  companies 
operating  in  1910,  and  18.3  per  cent  for  the  9  municipal 
plants  operating  at  the  same  date  (or  a  22.3  per  cent 
increase  if  the  manufacturing  town  of  Norwood  be  in- 
cluded). If,  however,  we  omit  Belmont,  which  was  subject 
to  an  abnormal  growth  as  a  result  of  its  proximity  to 
Boston  and  Cambridge,  the  rate  of  increase  for  the  muni- 
cipal group  becomes  only  12  per  cent.  Excluding  another 
exceptional  case,  Wellesley,  this  rate  would  be  further  low- 
ered to  6.2  per  cent  for  7  public  plants.    Three  private 


IN  MASSACHUSETTS 


147 


plants  and  one  public  plant  of  these  groups  show  some 
decrease  in  the  number  of  inhabitants  of  the  district  served. 
There  seems  to  be  no  getting  away  from  the  fact  that,  in 
general,  the  communities  with  their  own  purchasing  plants 
have  grown  more  rapidly  than  those  depending  upon  pri- 
vate enterprise.  However,  it  would  be  rash  indeed  to 
attribute  this  growth  solely  to  the  benefits  arising  from 
mimicipal  ownership.  Which  is  cause  and  which  is  effect 
would  be  difficult  to  state. 

The  density  of  population,  taking  into  consideration  all 
of  the  territory  and  population  served  in  both  cases,  is  for 
the  generating  companies  only  285.3  per  square  mile, 
while  for  the  corresponding  group  of  mimidpalities  it  is 
488.2,  or  71  per  cent  greater.  If  the  foreign  locaUties  be 
left  out,  we  still  find  the  districts  served  by  the  munici- 
pal plants  18  per  cent  more  densely  populated  (550.2  as 
compared  with  468.1  in  the  companies).  On  the  other 
hand,  the  group  of  companies  buying  their  current  serve 
a  district  60  per  cent  more  densely  populated  than  that  of 
the  similar  group  of  publicly  owned  plants  (218.2  as  op- 
posed to  136.7  per  square  mile).  This  condition  at  once 
suggests  the  probability  that  these  small  municipalities 
can  offer  very  slight  inducements  to  private  business  —  a 
probability  which  becomes  a  certainty  when  we  recall 
that,  though  the  average  age  of  this  group  of  nmnicipal 
plants,  including  the  time  under  private  operation,  is  just 
about  one  half  the  age  of  the  corresponding  group  of  com- 
panies, yet  only  8  of  these  municipalities  out  of  the  total 
of  21  were  supplied  by  private  plants  or  distributing  sys- 
tems previous  to  the  installation  of  their  own  plants.  The 
municipal  gmerating  plants,  on  the  contrary,  seem  to  have 
selected  the  more  favorable  territory. 

Summary 

The  conditions  which  have  been  indicated  by  the  fore- 
going analyses  may  be  summarized  as  follows: 


w 


M' 


148 


MUNICIPAL  ELECTRIC  LIGHTING 


.? 


1.  The  increase  in  station  equipment  of  all  kinds  has 
been  more  rapid  for  the  private  than  for  the  public  plants. 

2.  Though  relative  to  the  amount  of  business  done, 
there  does  not  seem  to  be  much  difference  in  the  total 
capacity  of  the  various  units,  yet  this  seeming  equality, 
on  the  part  of  the  municipal  plants,  is  accounted  for  by 
only  one  or  two  large  plants.  In  boiler  capacity,  53  per  cent 
of  the  public  plants  have  remained  stationary  or  gone  back. 

3.  The  average  size  of  units  is,  in  every  instance,  much 
larger  in  the  private  plants. 

4.  As  the  average  age  of  station  units  is  20  per  cent 
greater  for  the  public  than  for  the  private  plants,  it  seems 
reasonable  to  conclude  that  the  former  have  not  been  kept 
in  as  good  repair  as  the  latter. 

5.  The  capacity  relations  which  the  various  station 
units,  boilers,  engines,  and  dynamos  bear  to  each  other  is 
almost  identical  in  the  two  groups. 

6.  In  proportion  to  the  amount  of  current  generated, 
the  fuel  economy  seems  to  be  about  the  same  in  the  two 
groups,  with  an  average  advantage  for  the  companies. 

7.  The  municipal  plants  have  rapidly  increased  the  pro- 
portion of  current  bought  since  1910  from  1.3  to  12  per 
cent,  while  the  companies  have  shown  only  a  slight  increase 
£rom  4.1  to  6.5  per  cent. 

8.  The  load  factors^  so  far  as  ascertained,  are  slightly 
better  in  the  case  of  the  private  plants;  their  maximum 
demand  factor  is  lower;  and  the  diversity  factors  cannot  be 
found,  though  the  companies  appear  to  have  an  advantage 
in  this  regard. 

9.  Relative  to  the  actual  generating  capacity  of  stations, 
the  amount  of  business  done  seems  to  be  nearly  the  same 
for  the  two  groups. 

10.  The  pubUc  plants  have  a  much  lower  eflSciency  of 
distribution  as  shown  by  an  amount  of  current  unac- 
coimted  for  relatively  more  than  30  per  cent  higher  than 
that  of  the  companies. 


IN  MASSACHUSETTS 


149 


11.  While  the  municipal  plants  have  shown  a  greater 
percentage  increase  in  outputy  since  1910,  their  rate  of 
increase  in  the  quantity  of  current  actually  delivered  has 
been  about  the  same  as  that  of  the  companies. 

12.  At  present  the  relative  amount  of  current  supplied 
for  all  purposes  is  practically  the  same  in  the  two  groups, 
except  in  so  far  as  the  sales  to  other  companies  are  con- 
cerned, in  which  business  the  private  plants  are  in  the  lead. 

13.  As  to  the  different  classes  of  business,  the  municipal 
plants  have  increased  their  sales  for  power,  during  the  past 
five  years,  much  more  rapidly  than  have  the  companies, 
while  the  latter  have  increased  their  lighting  business  more 
rapidly  than  the  former.       ' 

14.  The  companies  are  somewhat  in  the  lead  both  in  the 
quantity  of  current  generated  and  in  the  amount  actiudly 
supplied  per  kilowatt  capacity  of  dynamos. 

15.  The  average  service  per  capita  seems  to  be  about  the 
same  in  both  cases;  but  the  per  capita  consumption  of 
current  for  street  lighting  is  50  per  cent  higher  in  the  case 
of  the  municipal  plants. 

16.  There  has  been  a  more  rapid  growth  in  the  total 
number  of  customers  of  the  companies  (103  per  cent  as 
opposed  to  90.2  per  cent).  In  the  separate  classes  of  busi- 
ness, however,  the  number  of  power  customers  has  in- 
creased more  rapidly  in  the  municipal  plants,  though  the 
companies  are  still  absolutely  in  the  lead,  averaging  91  cus- 
tomers per  plant  as  opposed  to  62  in  the  other  group.  The 
number  of  Ught  customers,  on  the  other  hand,  has  increased 
more  rapidly  in  the  private  plants,  evidently  due  to  their 
more  liberal  policy  of  extension. 

17.  The  number  of  customers  per  100  population  has 
increased  more  rapidly  for  the  companies,  though  on 
account  of  the  wide  extent  of  territory  served,  the  ratio  is 
still  about  the  same  as  that  of  the  municipal  plants. 

18.  The  average  amount  of  current  sold  per  customer 
is  slightly  greater  in  the  case  of  the  companies. 


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MUNICIPAL  ELECTRIC  LIGHTING 


19.  Though  the  connected  load  data  are  highly  unsatis- 
factory so  far  as  the  public  plants  are  concerned,  the  rate 
of  increase  in  the  total  reported  load  is  about  equal  in  the 
two  groups  and  corresponds  closely  to  the  increase  in  cur- 
rent sold. 

20.  The  relative  distribution  of  the  connected  load 
among  the  various  kinds  of  business  is  about  the  same 
in  each  group,  but  there  has  been  an  absolute  percentage 
decrease  of  the  commercial  lighting  load  for  the  municipal 
plants. 

21.  Both  the  total  number  of  lamps  per  plant  and  the 
number  per  customer  have  increased  much  more  rapidly 
in  the  companies,  while  there  seems  to  have  been  an  actual 
decrease  in  the  number  per  customer  in  the  municipal 
plants.  This,  however,  may  not  be  a  true  bill,  since  the 
municipal  plants  would  naturally  be  inclined  to  estimate 
their  load  more  carelessly  than  the  companies. 

22.  There  has  been  a  more  rapid  increase  of  the  con- 
nected power  load  of  the  public  plants,  and  the  average 
capacity  of  their  motors,  as  reported,  is  somewhat  higher 
than  in  the  other  group.  This  may  be  due  to  incorrect 
returns,  and  also  to  the  different  character  of  the  indus- 
tries carried  on  in  the  separate  localities. 

23.  While  the  connected  load  per  capita  is  higher  for 
the  public  plants,  the  connected  load  per  customer,  though 
it  has  decreased  slightly,  is  still  somewhat  greater  for  the 
companies. 

24.  There  appears  to  have  been  a  decrease  in  quantity 
of  current  consumed  per  kilowatt  connected  load  in  the 
companies  and  an  increase  in  the  municipal  plants  — 
probably  due  to  the  more  conservative  pc^cy  followed  by 
the  latter  in  the  matter  of  extensions. 

25.  The  rate  of  increase  in  the  total  number  of  street 
lights,  as  well  as  the  decrease  in  the  number  of  inhabitants 
served  by  one  light,  has  been  much  greater  for  the  com- 
panies, though  the  per  capita  figures  are  still  absolutely 


IN  MASSACHUSETTS 


151 


greater  for  the  public  plants.  Both  groups  show  a  marked 
increase  in  lamp  efficiency,  and  the  municipal  plants  appear 
to  have  a  longer  number  of  hours'  use  of  lamps  per  night. 

26.  In  length  of  lines,  the  rate  of  mcrease  has  been  much 
more  rapid  for  the  companies;  in  length  of  streets  with 
overhead  Unes,  about  twice  as  great;  whUe  in  the  numher 
of  poles  owned,  their  growth  has  been  almost  three-fold 
that  of  the  other  group. 

27.  There  has  been  an  increase  in  the  length  of  Imes  per 
customer  in  the  companies  and  an  actual  decrease  in  the 

municipal  plants. 

28.  The  municipal  plants  to  a  large  extent  use  privately 
owned  poles  instead  of  installing  their  own. 

29.  There  has  been  a  rapid  growth  of  underground  con- 
struction in  the  companies  and  apparently  none  whatever 
in  the  municipal  plants  except  in  the  case  of  Holyoke. 

30.  Though  it  is  practically  impossible  to  make  a  sepa- 
ration between  rural  and  urban  territory,  population,  or 
roads,  so  far  as  the  totals  are  concerned  the  districts  served 
by  the  companies  exceed  those  served  by  the  municipal 
plants  in  all  of  these  respects. 

31.  The  rate  of  growth  of  population  seems  to  have  been 
about  the  same  for  the  two  groups  of  generating  plants, 
while  for  the  purchasing  plants  there  has  been  a  more  rapid 
increase  in  the  case  of  the  municipalities. 

32.  The  density  of  population  is  much  greater  m  the 
districts  served  by  the  municipal  generating  plants  than  in 
the  districts  served  by  the  corresponding  group  of  com- 
panies. On  the  other  hand,  the  density  of  the  population 
of  the  area  served  by  the  municipal  purchasing  plants  is 
markedly  less  than  that  of  the  purchasing  companies. 

33.  The  two  outstanding  municipal  plants  of  Holyoke 
and  Norwood  have  certainly  done  well;  but  their  good 
record  is  probably  accounted  for  by  local  conditions  rather 
than  by  good  management  solely.  Though  beyond  a  doubt 
they  have  been  excellently  managed,  they  have  a  more 


152 


MUNICIPAL  ELECTRIC  LIGHTING 


favorable  territory,  due  to  no  efforts  of  their  own,  and 
better  business  than  any  of  the  other  plants  studied. 

Tentative  Conclusions  on  the  Physical  Results 
of  Public  Ownership 

Finally,  though  in  some  instances  there  seems  to  be  little 
to  choose  between  the  two  groups,  and  though  at  times  the 
tendencies  are  not  very  marked,  practically  all  of  the  phy- 
sical data  of  the  generating  plants  appear  to  indicate  that 
in  spite  of  their  less  desirable  territory  the  companies  have 
been  more  active  in  the  development  of  that  territory,  and 
have  made  better  provision  for  future  needs.  The  municipal 
plants,  on  the  other  hand,  for  the  most  part  seem  to  be 
operating  in  more  favorable  locahties  and  to  be  letting  their 
business  grow  up  around  them. 

For  the  purchasing  plants,  however,  our  analyses  of  the 
physical  data  lead  to  almost  the  opposite  conclusions. 
Viewed  from  almost  every  angle,  this  group  of  public 
plants  seem  to  be  making  more  out  of  their  poorer  terri- 
tory than  do  the  corresponding  companies  with  a  more 
favorable  district  to  serve.  They  appear  also  to  have 
secured  as  customers  a  larger  percentage  of  the  inhabitants 
in  the  less  desirable  portions  of  their  districts,  and  to  have 
a  much  more  efficient  distributing  system  per  customer. 


CHAPTER  V 

FINANCIAL  STATISTICS  OF  GENERATING  PLANTS: 
THE  CAPITAL  ACCOUNT  ^ 

Though  it  would  be  highly  mteresting  to  the  account 
to  make  a  careful  study  of  the  financial  history  of  each 
group  of  plants  from  the  very  beginning,  to  do  so  would 
necessitate  the  expenditure  of  an  enormous  amount  of  time 
for  which  the  recompense  would  be  comparatively  small. 
Accordingly,  having  made  some  analysis  of  the  laws  of  the 
State  in  so  far  as  they  relate  to  the  financial  management 
of  the  electric  lighting  business,  having  reviewed  the  work 
and  policies  of  the  Board  of  Gas  and  Electric  Light 
Commissioners,  and  having  surveyed  in  a  general  way  the 
development  of  the  industry  in  Massachusetts  under  both 
public  and  private  ownership,  we  will  in  this  chapter  usu- 
ally refrain  from  delving  into  the  ancient  history  of  our 
plants.  The  study  will,  for  the  most  part,  be  confined  to 
the  years  1910  and  1915,  with  a  more  detailed  analysis  for 
the  later  date.  As  in  the  precedmg  chapter,  the  generating 
plants  will  be  first  and  more  fully  considered.  Since  a 
reasonably  thorough  examination  of  the  physical  charac- 
teristics, equipment,  and  development  of  the  two  groups 
has  already  been  made,  the  writer  hopes,  on  the  one  hand, 
that  his  interpretations  will  be  less  likely  to  go  astray,  and, 
on  the  other,  that  his  readers  will  have  less  difficulty  ia 
following  his  line  of  argument. 

Before  taking  up  the  subject  of  operating  expenses, 
operating  income,  and  fixed  charges,  we  must  logically 
devote  some  attention  to  the  capital  account.  At  the  very 
outset  of  this  financial  investigation,  however,  we  are  con- 
fronted with  difficulties  which  are  well-nigh  insurmount- 

»  Appendix,  pp.  424-431.      . 


I 


154 


MUNICIPAL  ELECTRIC  LIGHTING 


able,  occasioned  by  the  fact  that  the  accounting  procedure 
of  public  and  private  plants  is  by  no  means  uniform.  This 
is  in  part  the  result  of  the  different  methods  which  the 
two  groups  employ  in  financing  themselves.  A  further 
complication  arises  from  the  provision  of  the  law  which 
requires  municipal  plants  to  write  off  3  per  cent  for  depreci- 
ation each  year,^  while  imposing  no  such  restriction  on  the 
companies,  which  accordingly  handle  the  matter  in  diverse 
ways.  And,  finally,  the  Board  itself  has  probably  not  given 
as  much  attention  as  might  be  desirable  to  the  problem  of 
securing  from  the  two  classes  of  plants  data  that  would  be 
conveniently  comparable. 

However  this  may  be,  we  are  at  first  glance  somewhat 
at  a  loss  to  know  exactly  what  is  the  "investment"  in 
either  a  mimicipal  or  a  private  electric  lighting  plant.  In 
each  case  several  possibilities  suggest  themselves,  even 
though  we  waive  all  consideration  of  the  different  bases  of 
valuation,  which  can  really  throw  little  light  on  our 
problem.  So  far  as  the  assessed  valuation  of  the  companies 
is  concerned,  for  obvious  reasons  it  usually  bears  no  accu- 
rate relation  to  the  investment  of  stockholders  and  cred- 
itors in  the  plant.  This  valuation  is  upon  the  average  more 
than  25  per  cent  below  the  book  value.  Hence,  since  we 
must  depend  upon  the  returns  for  oiu*  information,  it  be- 
comes a  question  either  of  taking,  as  the  true  investment, 
the  total  cost  of  plant  as  shown  by  the  books,  —  the  con- 
struction accounts,  which  have  sometimes  been  depreciated 
and  sometimes  not,^  —  or,  in  lieu  of  this,  of  assuming  that 
the  total  liability  of  the  company  for  stock,  bonds,  notes, 

1  Mass..  1914,  ch.  742.  sect.  114. 

*  The  "plant  accounts"  ordinarily  include  —  cost  of  real  estate  Gand3 
and  buildings  are  not  always  separated),  steam  plant,  electric  plant, 
water  power  plant,  lines,  transformers,  meters,  street  lamps  and  fixtures. 
No  "working  capital"  is  included,  and  no  allowance  is  made  for  mate- 
rials, tools,  or  other  equipment  of  a  transitory  sort.  Such  allowance  is 
unnecessary  for  our  purposes,  though  it  must  always  be  borne  in  mind 
when  valuation  problems  are  under  discussion. 


IN  MASSACHUSETTS 


155 


and  premiums  on  stock  if  such  there  be,  will  give  us  the 
true  index  of  capital  investment.  Since  the  law  requires 
that  all  stock  shall  be  fully  paid  up,  and  shall  be  sold  for 
not  less  than  par,  and  that  for  every  dollar  borrowed  a 
dollar  shall  be  put  into  the  business  by  the  stockholders,^ 
the  latter  would  be  a  reasonably  safe  criterion,  were  it  not 
for  two  considerations.  In  the  first  place,  large  surpluses 
are  frequently  built  up  out  of  earnings,  and  in  the  second 
place,  while  most  of  the  numerous  outstanding  notes  repre- 
sent bona  fide  investment,  there  are  cases  in  which  they 
may  have  been  issued  to  cover  losses  due  to  bad  manage- 
ment, bad  luck,  or  even  to  exploitation  by  other  interests 
in  control.  Did  the  Board  have  control  over  the  issue  of 
coupon  notes  as  well  as  over  that  of  stock  and  bonds,  this 
difficulty  should  be  largely  removed. 

A  further  complication  arises,  however,  resulting  fronk 
the  fact  that  several  of  the  plants  are  composite,  and  it  is 
not  possible  from  a  study  of  the  accounts  to  determine 
exactly  how  much  of  the  liability  was  occasioned  by  the 
gas  business  and  how  much  by  the  electrical  business,^ 
Upon  an  examination  of  all  of  the  data  available,  it  is 
reassuring  to  find  that  for  the  \%  purely  electric  companies^ 
the  total  book  value  is  just  4  per  cent  higher  than  the  total 
amount  of  capital,  loans,  and  premiums.  Hence,  whicheva; 
figures  we  use,  it  will  make  little  difference.  Even  though 
in  individual  cases  there  is  frequently  a  considerable  dis- 
crepancy, the  averages  will  be  sufficiently  accurate. 

Since  an  excess  of  ccmstruction  accounts  ov^  capita) 
and  loan  liabilities  is,  when  existent,  doubtless  built  up 
out  of  reinvested  earnings,  the  writer  has  always  taken  the 
former  as  the  true  investment,  except  when  the  latter 
exceed  this  account,  in  which  case  the  capital  and  loans 

*  Cf.  ch.  n,  p.  49. 

'  In  the  case  of  the  five  municipal  plants  which  are  more  or  less  linked 
up  with  the  public  water  supply  system.  Concord,  Ipswich,  Merrimac, 
North  Attleborough,  and  Hudson,  the  accounts  are  kept  sufficiently 
separate  to  occasion  no  great  difficulty. 


iH= 


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MUNICIPAL  ELECTRIC  LIGHTING 


have  been  taken;  for,  even  granting  that  the  sum  of  these 
may  not  always  represent  "live"  plant,  it  probably  does 
indicate  that  so  much  money  has  been  invested,  whether 
wisely  or  unwisely,  —  a  point  which  will  be  later  referred 
to  in  connection  with  our  study  of  depreciation.  In  accord- 
ance with  this  method  of  reckoning,  then,  there  can  be  no 
doubt  that  the  capital  account  of  the  companies  is  made 
sufficiently  high. 

For  the  public  plants  the  problem  is  less  simple.  Two 
different  plant  accounts  are  kept,  the  toted  (gross)  plant 
cost  —  since  1912  not  including  payments  of  any  kind  from 
the  depreciation  fimd  —  and  the  depreciated  plant  cost. 
The  latter  accounts  average  more  than  25  per  cent  lower 
than  the  former,  though  in  several  instances  the  two  are 
identical.  In  the  depreciated  plant  account,  as  pubUshed 
annually  by  the  Board,  additions  from  construction  fund 
and  other  sources  as  well  as  renewals  from  the  depreciation 
fund  are  at  present  debited.  The  account  is  then  credited 
with  the  statutory  amoimt  of  depreciation,  apportioned 
among  the  various  items  more  or  less  arbitrarily  according 
to  the  judgment  of  the  manager,  and  with  other  items 
which  are  written  off.  Theoretically  this  account  should 
represent  the  actual  financial  condition  of  the  plant,  and 
it  might  be  expected  to  correspond  with  the  plant  account 
kept  by  the  companies.  Practically,  however,  such  is  not 
the  case. 

In  the  first  place,  the  practice  of  writing  off  S  per  cent 
depreciation  annually  (before  1906  the  rate  was  5  per 
cent),  and  the  customary  accumulation  of  a  depreciation 
fund  which  is  carried  as  an  asset,  makes  the  mimicipal 
plant  account  disproportionately  low  as  compared  with 
the  accounts  carried  by  the  companies,  some  of  which,  to 
be  sure,  have  very  regularly  written  off  their  depreciation, 
but  many  of  which  provide  for  it  in  their  operating  accounts. 
Furthermore,  the  latter  rarely  carry  a  depreciation  fund 
account.  Consequently,  when  their  plant  account  is  cred- 


IN  MASSACHUSETTS 


157 


ited  with  depreciation,  a  corresponding  increase  will  ordi- 
narily appear  in  the  entry  for  "additions  made  during  the 
year,'*  as  a  result  of  renewals,  new  construction,  and  so 
forth. 

But,  secondly,  the  "dead"  assets  of  the  municipal  plants 
are  usually  written  off  promptly,  so  as  to  show  a  low  plant 
accoimt,  even  though  the  original  loan  may  be  still  out- 
standing. The  companies,  on  the  other  hand,  for  suffi- 
ciently obvious  reasons,  frequently  let  their  accounts  stand 
as  they  originally  were,  even  though  a  portion  of  the  plant 
may  be  defunct.  But,  whenever  they  apply  to  the  Board 
for  the  approval  of  a  new  issue  of  securities,  this  aspect  of 
their  finances  is  thoroughly  investigated,  and  if  a  discrep- 
ancy is  found  to  exist  between  the  book  value  and  the 
liability  for  capital  and  loans,  the  company  is  required  to 
put  aside  from  earnings  until  the  deficit  is  made  good.^ 

The  gross  plant  account  of  the  municipal  plants,  which 
is  never  published  by  the  Board,  more  nearly  corresponds 
to  the  account  carried  by  the  companies,  for,  though  it  is 
undepreciated,  no  additions  from  the  depreciation  fund, 
even  after  a  transfer  has  been  made  to  the  construction 
fund,  are  included.  The  dead  assets  are  not  as  a  rule 
written  off,  since  the  account  is  intended  to  show  all  the 
money  that  has  actually  been  invested  in  the  plant  from 
the  beginning.  These  accounts,  however,  are  not  similarly 
kept  by  the  various  municipaUties.  Some  include  additions 
from  earnings  —  which  is  perfectly  proper,  though  a  most 
insignificant  item  —  while  others  do  not.  Some  persist 
in  depreciating  the  account  and  debiting  the  renewals  from 
depreciation,  so  that  it  coincides  with  the  published  plant 
account.  And,  finally,  one  or  two,  while  not  depreciating 
this  account,  have  continued  to  include  payments  from 
the  depreciation  fund  not  merely  for  new  construction  but 
for  renewals,  as  they  did  prior  to  1912.  For  these  reasons 
this  account,  in  individual  cases,  is  not  wholly  satisfactory, 

^  Mass.,  1914,  ch.  742,  sect.  40. 


H 

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MUNICIPAL  ELECTRIC  LIGHTING 


r  I 


particularly  for  the  earlier  period.  To  make  the  1910 
aecoimts  absolutely  comparable  with  those  for  1915,  would 
in  some  instances  be  a  task  which  would  require  the  serv- 
ices of  a  stajff  of  expert  accountants. 

In  view  of  these  difficulties,  the  writer  has  chosen,  as 
most  nearly  representing  the  true  investment  in  the  pub- 
lic plants,  the  so-called  total  investment  as  computed 
from  year  to  year  by  the  Board.  These  figures  include  all 
amounts  which  have  been  invested  by  the  municipality  in 
each  plant  since  its  installation,  whether  raised  by  loans 
or  by  direct  taxation,  and  at  a  given  time  would  be  indi- 
cated by  the  bonds  and  notes  outstanding,  the  appropria- 
tions for  bond  and  note  payments,  and  the  appropriations 
for  construction.  It  is  frequently  necessary  to  go  back 
over  the  returns  for  a  number  of  years  in  order  to  find  the 
exact  basis  of  computation,  for  occasionally  one  note  has 
been  taken  up  by  another,  and  sometimes  a  payment  has 
been  made  from  earnings,  thus  leaving  no  recorded  liability 
in  the  published  accounts  of  the  plant.  The  aggregate 
investment  as  thus  computed  coincides  so  closely  with  the 
gross  plant  cost  as  above  discussed,  being  only  1.2  per  cent 
below  it,  that,  except  for  the  sake  of  convenience  in  making 
comparisons  with  1910,  it  would  really  matter  little  which 
figures  we  take  for  1915. 

The  chief  reason  for  the  slight  difference  between  the 
two  totals  is  due  to  the  fact  that  in  one  or  two  cases  a  small 
amount  has  been  added  to  the  plant  out  of  earnings.  In 
Holyoke,  of  course,  there  has  been  a  considerable  addition 
from  this  source,  and  so  the  qtoss  cost  has  been  used.  It 
should  also  be  noted  that  in  the  case  of  all  the  composite 
plants  the  total  cost  has  been  used,  except  in  the  one  in- 
stance of  Wakefield,  where  this  seemed  not  to  represent 
the  true  investment.  In  these  cases  any  attempt  at  a  divi- 
sion of  liabiUties  between  the  two  branches  of  the  business 
would  be  purely  arbitrary,  based  on  the  relations  which  the 
electric  assets  bear  to  the  gas  assets. 


IN  MASSACHUSETTS 


159 


The  writer  believes  that,  with  these  explanations  and 
qualifications,  the  investment  data  herein  presented  are 
reasonably  comparable,  though  far  from  satisfactory. 
They  do  not  by  any  means  necessarily  represent  the  actual 
value  of  the  property  in  either  case  —  indeed,  they  are 
frequently  far  from  it.  Consequently,  conclusions  derived 
from  the  use  of  these  figures  will  be  relative  rather  than 
absolute.  Whenever  feasible,  exceptional  cases  will  be  lost 
sight  of  in  the  group  averages.  Otherwise  attention  will 
be  given  to  each  anomaly  as  it  presents  itself.  Upon  the 
whole,  it  is  probably  safe  to  assume  that  the  conditions 
indicated  by  this  particular  study  are  not  far  from  the 
truth: 

Upon  comparison  of  the  total  investment  in  each  group, 
as  arrived  at  in  the  manner  outlined,  a  number  of  highly 
interesting  conditions  become  apparent.  The  total  invest- 
ment per  company  was,  in  1910,  $187,067,  or  36.5  per  cent 
more  than  that  of  the  average  public  plant,  which  stood 
at  $137,461.  During  the  five-year  period,  however,  the 
rate  of  increase  of  the  former  was  66  per  cent,  and  for  the 
latter  only  25.1  per  cent,  or  28.6  including  Holyoke.  Hence 
in  1915  the  average  investment  per  plant  was  $171,990  for 
the  municipal  group  and  $310,840,  or  81.2  jter  cent  higher 
for  the  private  plants. 

Probably  the  casual  student  would  be  tempted  to 
say,  —  "There  we  have  it.  Public  financing  is  more 
economical  than  private  financing!"  But  we  must  not  be 
led  into  any  hasty  conclusions.  These  apparent  differences 
in  the  mvestment  accounts  must  be  interpreted  in  the  light 
of  the  facts  which  have  been  reviewed  in  the  preceding 
chapter,  and  of  other  facts  which  are  presently  to  follow. 
The  accompanying  table  will  help  to  recall  to  the  reader 
the  general  features  of  the  physical  development  of  the 
two  groups  of  plants. 

Now,  it  appears  that  the  private  plant  investment  in 
1910,  in  proportion  to  the  amount  of  business  done,  was 


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IN  MASSACHUSETTS 


161 


by  no  means  excessive  when  compared  with  the  investment 
in  the  municipal  plants.   On  the  contrary,  when  we  con- 
sider that  the  quantity  of  current  sold  by  the  former  was 
65.3  per  cent  higher  than  that  delivered  by  the  latter, 
while  the  kilowatt  capacity  of  generators  was  only  35.3 
per  cent  higher,  it  is  probable  that,  relatively,  the  com- 
panies   were    somewhat    under-equipped.    Furthermore, 
from  the  fact  that  their  length  of  streets  with  overhead 
lines  was  only  12  per  cent  greater  than  that  of  the  pub- 
lic plants,  it  is  evident  that  their  territory  had  not  been 
comparatively  as  thoroughly  developed.   For  these  reasons 
the  spread  between  the  average  investment  in  the  two 
groups  was  not  great,  and  was  almost  identical  with  the 
difference  in  kilowatt  capacity  of  stations.    One  seems  to 
have  been  just  as  conservatively  financed  as  the  other, 
with  the  doubt  probably  in  favor  of  the  private  plants. 
But,  for  the  same  reasons,  we  can  expect  to  find  a  more 
rapid  increase  in  investment  in  the  companies  a^  service 
is  more  widely  extended  throughout  the  districts  served 
and  as  future  needs  are  anticipated. 

Assuming,  then,  that  we  start  in  1910  with  a   fairly 
accurate  basis  of  comparison,  we  must  discover  why  the 
increase  in  investment  has  seemingly  been  so  much  more 
rapid  for  the  companies.  Accordingly,  first  of  all,  we  note 
that,  while  there  is  no  underground  construction  in  the  17 
municipal  plants  (Holyoke  has  about  $90,000  in  under- 
ground cables  and  conduits),  and  while  there  was  almost 
none  of  it  in  the  companies  in  1910,  the  increase  has  been 
extraordinarily  rapid,  though  confined  almost  solely  to  the 
two  companies  of  Gloucester  and  Beverly.  This  one  item 
alone  accounts  for  an  increased  investment  of  more  than 
$350,000,  which  is  not  met  with  in  the  public  plants,  and 
if  this  amount  be  deducted  from  the  total  investment  of 
the  former,  the  rate  of  increase  becomes  only  55  per  cent 
instead  of  66  per  cent. 
Again,  the  increase  in  number  of  poles  owned  has  been 


4ll 


162 


MUNICIPAL  ELECTRIC  LIGHTING 


so  small  in  the  public  plants,  due  to  the  fact,  as  above  ex- 
plained, that  they  have  been  impressing  foreign  poles  into 
their  service,  that  this  one  item  further  seriously  distorts 
the  comparative  figures  of  investment.  Had  the  increase  in 
the  companies  been  at  a  Uke  rate,  28.1  instead  of  76.2  per 
cent,  they  would  in  1915  have  had  at  least  12,000  fewer 
poles  than  they  actually  report  at  that  date.  Allowing 
about  $15  per  pole,  by  no  means  an  excessive  price  as 
nearly  as  can  be  ascertained,  to  cover  the  cost  of  pole,  set- 
ting, cross-arms,  braces,  pins  and  insulators,  and  inciden- 
tals, we  would  be  able  to  account  for  an  additional  increase 
of  from  $175,000  to  $200,000  in  the  private  plant  invest- 
ment. If  this  amount  be  deducted  from  the  total,  as  well 
as  the  $350,000  for  underground  construction,  the  rate  of 
increase  in  the  investment  of  the  companies  becomes  less 
than  49  per  cent,  while  the  excess  of  their  investment  over 
that  of  the  municipal  plants  is  reduced  to  only  62  per  cent 
instead  of  81.2  per  cent.  In  view  of  the  fact  that  the  amount 
of  current  disposed  of  by  the  former  is  63  per  cent  greater 
than  in  the  latter,  and  also  by  reason  of  the  fa<;t  that  they 
are  extending  their  distribution  systems  much  more  widely 
at  the  present  time,  this  difference  in  investment  is  by  no 
means  disproportionate.  Other  reasons  for  the  difference 
will  be  given  presently. 

But  this  is  not  the  whole  story.  While  there  has  been 
a  considerably  more  rapid  growth  in  the  generating  ca- 
pacity of  the  companies  (52  as  opposed  to  43  per  cent  in 
the  other  group),  the  increase  in  the  average  size  of  these 
generators  has  been  almost  twice  as  great  (100  per  cent 
as  contrasted  with  54.6  per  cent).  This  naturally  means 
a  much  more  rapid  increase  in  station  investment,  for  in 
most  instances  the  change  from  smaller  to  larger  units  has 
been  in  the  nature  of  an  addition  or  improvement  rather 
than  a  renewal,  and  so  may  lawfully  be  considered  a 
capital  charge. 

Furthermore,  the  length  of  lines  has  increased  almost 


IN  MASSACHUSETTS 


163 


50  per  cent  more  rapidly  in  the  companies,  and  the  length 
of  roads  with  overhead  Hues  nearly  75  per  cent  more 
rapidly.^  Since  the  number  of  miles  of  line  per  mile  of 
overhead  is  about  the  same  in  the  two  groups,  4.5  miles, 
the  increase  not  only  indicates  a  relatively  greater  invest- 
ment for  wire  and  other  materials,  but  it  also  probably 
signifies  that  the  labor  costs  of  extension  have  been  more 
than  proportionately  higher  as  a  result  of  the  distribution 
of  service  over  so  much  wider  an  area,  where  frequently, 
on  account  of  the  rocky  character  of  the  soil,  construc- 
tion is  a  very  difficult  and  expensive  matter.^ 

The  more  rapid  growth  in  number  of  customers  in  the 
private  plants  brings  with  it  a  correspondingly  greater 
investment  in  customers'  meters.  The  much  more  rapid 
increase  in  the  number  of  street  lamps  also  occasions  a 
considerably  higher  ratio  of  increase  in  investment.  Fm- 
ally,  in  a  number  of  cases  which  cannot  well  be  ascertained, 
the  customers  of  public  plants  have  borne  the  cost  of 
extensions  on  their  own  property  —  a  practice  which  aids 
in  keeping  the  line  investment  comparatively  low. 

The  writer  believes  that  the  more  rapid  rate  of  increase 
in  investment  in  the  companies  is  fully  accoimted  for  by 
the  foregoing  considerations,  not  to  mention  a  number  of 
others.  But  we  should  not  overlook  the  fact  that  in  some 
cases  part  of  the  increase  might  be  due  to  bad  management. 
This  may  be  accounted  for  by  lack  of  foresight  and  judg- 
ment on  the  part  of  those  who  manage  the  business,  or 
it  may  be  the  result  of  actual  exploitation  by  associations 
or  individuals  who  control  a  majority  of  the  stock.  This 
exploitation  may  be  of  two  sorts,  first,  the  distribution  of 

»  It  is  true  that  companies  might  be  more  inclmed  to  keep  "dead" 
wire  on  their  books  than  are  the  public  plants,  for  in  case  of  rate  disputes 
or  new  security  issues,  there  might  be  some  advantage  in  making  the 
physical  property  look  large.  There  is,  however,  no  reason  to  suppose 
that  this  tendency  has  been  more  marked  since  1910  than  before  that 

date. 
»  Cf.  ch.  XI,  p.  305.  The  local  survey  has  shown  this  to  be  a  fact. 


I 


I 


PI 
i" 


104 


MUNICIPAL  ELECTRIC  LIGHTING 


the  highest  possible  dividends,  and  the  consequent  pro- 
vision for  depreciation  out  of  new  capital  raised  by  the 
issue  of  notes  —  the  payment  of  dividends  out  of  capi- 
tal. And,  secondly,  material  may  have  been  sold  to  the 
companies  by  controlling  associations  at  an  abnormally 
high  price,  which  would  yield  the  favored  stockholders  a 
handsome  return,  even  though  no  dividends  at  all  should 
be  paid  on  their  stock.  The  additions  to  plant  thus  made 
would  unduly  inflate  the  capital  account. 

At  first  glance,  the  internal  evidence  seems  to  suggest 
that  some  of  these  things  might  have  happened  in  the  case 
of  Plymouth  and  Weymouth  in  both  of  which  the  invest- 
ment appears  to  have  increased  more  rapidly  than  cir- 
cumstances would  warrant,  though  in  the  latter  the  in- 
vestment per  kilowatt  capacity  is  low.    In  both  of  these 
plants,  also,  there  were,  in  1915,  an  abnormal  number 
of  notes  outstanding,  $162,499  and  $217,000  respectively,^ 
or  in  each  case  40  per  cent  of  the  capital  and  loan  Kabilities, 
while  in  1910  the  amounts  were  only  $54,000  and  $36,000 
—  still  rather  large.    However,  so  far  as  the  writer  has 
been  able  to  ascertain,  his  theoretical  deductions  regarding 
these  plants  are  scarcely  justified  at  present,  though  dm-ing 
the  year  no  depreciation  was  charged  off.  Amesbury,  also, 
appears  to  have  been  rather  badly  managed  earUer,  and 
returns  a  higher  investment  than  we  would  have  expected 
in  spite  of  the  low  investment  per  kilowatt  capacity.   On 
the  other  hand,  probably  most,  if  not  all,  of  the  rapid  in- 
crease of  investment  in  these  plants  can  be  accounted  for 
by  the  enormous  growth  of  their  Unes  and  streets  with 
overhead  lines,  averaging  150  per  cent  and  120  per  cent 
respectively.    Accordingly,  if  these  three  companies,  to- 
gether with  Gloucester  and  Beverly,^  all  of  which  are 
abnormal,  be  eliminated,  even  though  their  investment 

*  The  amounts  were  later  greatly  reduced. 

«  Cf.  p.  133,  supra.   Their  underground  construction  has  been  very 
large  since  1910. 


IN  MASSACHUSETTS 


165 


has  not  increased  more  rapidly  than  their  business,  the 
rate  of  increase  of  investment  in  the  private  plants  be- 
comes 41.2  per  cent,  in  place  of  66  per  cent.  And  if,  in 
addition,  we  leave  out  Buzzard's  Bay,  which  was  at  its 
inception  in  1910,  the  rate  drops  to  31.3  per  cent,  or  little 
higher  than  the  rate  of  increase  in  the  municipal  plants. 

Hence,  from  every  point  of  view,  the  conclusion  thus 
far  reached  seems  to  be  that  on  the  average  the  group  of 
private  plants  suffers  nothing  in  comparison  with  the 
public  plants  so  far  as  their  investment  is  concerned,  and, 
if  a  few  of  the  exceptional  cases  be  eliminated,  the  remain- 
ing companies  make  a  somewhat  better  showing  than  the 

municipalities. 

Upon  analysis  it  appears  that  the  total  investment  per 
kilowatt  capacity  of  dynamos  in  the  two  groups,  while 
practically  the  same  in  1910,  was  considerably  higher 
(30  per  cent)  for  the  companies  in  1915. *  For  the  munici- 
pal plants  the  decrease  had  been  15  per  cent,  from  $207 
to  $176,  while  the  other  group  showed  an  increase  of  9.6 
per  cent,  from  $208  to  $228.   Most  of  the  increase  in  the 
latter,  however,  was  accounted  for,  as  has  been  explained, 
by  the  construction  of  conduits  and  the  installation  of 
new  poles  instead  of  the  utilization  of  foreign  poles  as  in 
the  case  of  the  public  plants.  If,  in  order  to  make  our  data 
comparable,  we  deduct  the  cost  of  these  items,  about 
$550,000,  the  investment  per  kilowatt  becomes  $24  less, 
or  $204,  an  actual  decrease  of  2  per  cent  for  the  period. 
Half  of  the  remaining  difference  of  $28,  is  easily  accounted 
for  by  the  more  rapid  rate  of  extension  of  lines  in  the  com- 
panies.  The  rest  is  probably  covered  by  the  other  items 
above  mentioned.    So  again,  after  reasonable  allowances 
have  been  made  for  the  obvious  differences  in  physical 
development,  the  total  investment  per  kilowatt  capacity 

»  At  both  dates  Great  Harrington  and  Winchendon  are  omitted  from 
the  list  of  companies,  because  their  large  mvestment  m  water  powef 
facilities  makes  their  capital  account  abnormally  high. 


II 


166 


MUNICIPxVL  ELECTRIC  LIGHTING 


will  have  decreased  at  approximately  the  same  rate  in 
both  groups.  The  accompanying  chart  (II)  shows  the 
investment  relations  existing  between  the  individual 
plants.  It  is  for  the  most  part  easy  to  account  for  the  con- 
spicuous peaks  in  the  graph  for  the  companies.  The  first 
two  are  due  to  the  comparatively  large  investment  in 
water-power  development,  with  a  correspondingly  low 
generating  capacity,  found  in  Winchendon  and  Great 
Barrington.  The  next  high  point  shows  the  condition  of 
Plymouth,  which  was  at  the  time  doing  a  large  business 
with  a  disproportionately  small  generating  equipment,^ 
and  in  which  there  has  actually  been  a  decrease  in  the 
kilowatt  capacity  of  dynamos  since  1910,  in  spite  of  a 
150  per  cent  increase  in  the  number  of  customers  and  a 
SOO  per  cent  increase  in  the  length  of  lines.  The  last  peak 
represents  Beverly,  in  which,  as  already  stated,  the  cost 
of  underground  construction  figures  heavily.  Charts  III 
and  IV  throw  further  Hght  on  the  situation. 

The  question  may  at  this  point  be  asked,  why,  when  the 
more  obvious  differences  between  the  two  groups  have 
been  eliminated,  the  investment  per  kilowatt  capacity 
is  not  lower  in  the  private  plants,  which  are  somewhat 
larger,  than  in  the  public  plants.  This  fact  is  not  in  itself 
significant,  for  reasons  that  are  about  to  be  given.  But 
several  obvious  replies  might  be  made  to  the  query,  (a) 
The  difference  in  size  is  not  great  enough  to  have  much 
effect  upon  the  per  capacity  investment,  {b)  There  might 
be  a  higher  proportion  of  "dead"  assets  in  the  plant 
account  of  the  companies,  in  spite  of  the  fact  that  the 
average  age  of  their  station  units  (7.6  years)  is  markedly 
less  than  the  age  of  the  municipal  plant  units  (9.1).  (c) 
The  companies  may,  in  some  instances,  not  have  bought 
their  equipment  so  economically  as  have  the  other  group 
—  Massachusetts   municipahties   are   noted   among   the 

I  Plymouth  has  since  found  it  necessary  to  purchase  her  current  most 
ol  the  time. 


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IN  MASSACHUSETTS 


167 


(I 


trade  as  "shrewd  bargainers."   And  (d)  the  real  estate 
investment  as  reported  by  the  public  plants  does  not  in 
many  cases  represent  the  true  value  of  the  property  used. 
Four  of  them,  Ipswich,  Merrimac,  North  Attleborough, 
and  Wakefield,  report  no  land  whatever,  as  it  is  owned  by 
some  other  municipal  department.  One  plant,  Merrimac, 
reports  neither  building  nor  land.     Several  of  them  do 
not  separate  the  value  of  their  land  from  the  value  of 
their  buildings,  and  probably  most  of  them  place  too  low 
a  value  upon  the  land  origmally  secured  from  the  munici- 
pality itself.    Also  since  they  frequently  depend  upon  the 
town  hall  or  some  other  public  building  for  their  office 
room,  they  have  not  found  it  necessary  to  enlarge  their 
building  capacity  for  this  purpose  as  has  often  been 
the  case  with  the  private  plants.   If  the  value  of  the  re- 
ported real  estate,  amounting  to  $857,368  and  $356,609 
respectively,^  is  deducted  in  each  group,  as  well  as  about 
$550,000  for  underground  construction  and  excess  increase 
in  new  poles  for  the  companies,  the  average  investment  per 
kilowatt  capacity  becomes  $167  for  the  companies  and 
$159  for  the  pubUc  plants,  notwithstanding  the  fact  that 
the  distributing  system  of  the  former  covers  a  much  more 
extensive  territory. 

In  this  connection  it  should  be  observed  that  for  all 
municipal  and  private  electric  light  and  power  stations  in 
the  United  States  in  1912,  the  total  investment  per  kilo- 
watt capacity  of  generators  was  for  the  former  $289,  and 
for  the  latter  $424.^  Evidently  the  financial  management 
of  both  public  and  private  electric  plants  in  Massaxihu- 
setts  is,  comparatively,  unusually  conservative,  and  the 
two  groups  seem  to  be  in  this  State  more  nearly  on  the 

same  footing. 

If  we  separate  the  investment  in  station  and  real  estate 

*  Additional  reasons  for  the  low  mvestment  in  real  estate  became 
painfully  evident  after  the  local  survey  was  made.   Cf.  ch.  xi,  infra, 
«  Central.  1912:66. 


I  I 


168 


MUNICIPAL  ELECTRIC  LIGHTING 


on  the  one  hand  from  the  amount  invested  m  the  distri- 
bution system  on  the  other,  some  very  significant  relations 
can  be  discovered.  In  the  first  place,  the  growth  in  station 
investment  has  been  about  the  same  in  the  two  groups, 
38.1  per  cent  in  the  companies  and  34.6  per  cent  in  the 
municipalities.  This  slight  difference  is  more  than  ac- 
counted for  by  the  greater  increase  in  total  capacity  and 
in  average  size  of  dynamos  in  the  former.  The  averages 
for  station  investment  per  kilowatt  capacity  are  very  close 
together  in  both  groups,  $111  for  the  companies  and  $101 
for  the  public  plants,  and  they  have  decreased  at  a  fairly 
equal  rate,  from  $116  in  the  one  case  and  from  $107  in  the 
other.  If  we  deduct  the  investment  in  real  estate,  which 
is  more  than  140  p)er  cent  higher  in  the  companies  than  in 
the  municipalities,  for  reasons  which  have  been  in  part 
suggested,  the  station  investment  per  kilowatt  capacity 
is  found  to  be  less  than  $74-  in  the  former  and  $80  in  the 
latter,  a  condition  which  certainly  speaks  well  for  the  pri- 
vate plants  in  view  of  the  fact  that  their  equipment  is  also 
newer  than  that  of  the  other  group.  FinaUy,  the  station 
investment  per  kilowatt  hour  generated  is  only  8.4  cents 
in  the  companies  and  9.5  cents,  or  13.1  per  cent  higher  in 
the  mimicipal  plants.  From  these  analyses  it  is  reason- 
ably evident  that  the  station  economy,  so  far  as  equip)- 
ment  is  concerned,  is  somewhat  greater  in  the  privately 
owned  plants.^  Chart  HI  shows  the  close  correspondence 
of  station  investment  per  kilowatt  capacity  in  the  two 
groups,  and  the  two  noticeable  peaks  caused  by  invest- 
ment in  water  power  development  have  already  been 
explained. 


^  The  individual  plants,  in  such  analyses  as  these,  present  many  anom- 
alies, particularly  in  the  niatter  of  investment  per  kilowatt  capacity. 
In  some  cases,  of  which  Holyoke  is  a  good  example,  the  installation  of 
a  large  additional  dynamo  capacity  within  the  year  serves  to  make  the 
data  for  1915  entirely  disproportionate  to  those  for  1910.  It  might  be 
interesting,  but  not  highly  useful,  to  attempt  to  explain  these  individual 
cases  which  seem  to  vary  widely  from  the  average. 


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111 


IN  MASSACHUSETTS 


169 


The  investment  in  distributing  system  in  1910  was  47.5 
per  cent  of  the  total  investment  in  the  mmiicipal  plants 
and  only  41.5  per  cent  in  the  case  of  the  companies.  But 
five  years  later  these  relations  had  so  reversed  themselves 
that  the  ratio  was  only  43.6  per  cent  in  the  former  and 
51.5  per  cent  in  the  latter.  This  is  truly  a  remarkable  sit- 
uation, for,  while  the  increase  in  investment  in  distribu- 
tion system  was  only  14.6  per  cent  in  the  public  plants, 
that  of  the  private  plants  was  105.4  per  cent  —  a  seven- 
fold more  rapid  increase!  If  the  increase  due  to  the  con- 
struction of  conduits  be  deducted,  the  rate  would  still  be 
nearly  80  per  cent. 

Furthermore,  it  must  be  observed  in  this  connection 
that  the  station  investment  of  the  municipal  plants,  as 
given  for  1910,  is  somewhat  too  high,  due  to  the  above 
mentioned  practice,  in  many  cases,  of  charging  to  the  un- 
depreciated capital  account  renewals  from  the  deprecia- 
tion fund.  This  largely  explains  the  fact  that  5  of  the 
plants,  including  Holyoke,  actually  report  a  lower  station 
cost  in  1915  than  in  1910,  though  some  of  them  have  simply 
written  off  their  worn-out  equipment.  All  of  the  public 
plants  revised  their  accounts  for  the  correction  of  this 
error  in  1912.  Hence,  if  the  proper  allowances  were  made, 
we  would  accordingly  find  the  rate  of  increase  in  station 
investment  considerably  higher  than  it  now  appears,  and 
the  proportionate  decrease  in  distribution  investment 
even  more  marked  than  it  is  here  shown  to  be. 

Now,  the  proportion  of  current  purchased  by  the  muni^ 
cipal  plants  increased  from  practically  nothing,  1.3  per  cent 
of  the  total  output  m  1910  to  12  per  cent  in  1915.  For  the 
companies,  on  the  other  hand,  the  proportion  increased 
from  4.1  per  cent  at  the  earlier  date  to  only  6.5  per  cent 
at  the  end  of  five  years  —  a  change  which  is  practically 
negligible.  In  view  of  these  facts,  it  is  sufficiently  surpris- 
ing to  find  the  rate  of  increase  in  station  investment  of  the 
former  to  be  so  nearly  equal  to  that  of  the  latter.  At  any 


170 


MUNICIPAL  ELECTRIC  LIGHTING 


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rate,  we  would  naturally  expect  a  correspondingly  more 
rapid  growth  in  their  line  investment,  since  they  obviously 
are,  or  should  be,  distributing  more  current  than  formerly 
in  proportion  to  their  generating  capacity.  But,  as  we 
know  that  several  of  the  municipal  plants  are  quitting 
the  business  of  generating  current,  to  find  their  station 
investment  (Holyoke  excluded)  increasing  nearly  two  and 
one  half  times  as  rapidly  as  their  distribution  investment, 
with  nothing  to  show  that  this  is  caused  by  any  special 
effort  to  prepare  for  future  business,  "needs  must  make  us 
pause.** 

To  be  sure,  some  allowance  must  be  made  for  the  fact 
that  the  municipal  plants  had  a  somewhat  better  developed 
territory  than  the  companies  in  1910.  Hence  we  would 
not  expect  their  rate  of  development  to  be  equally  rapid. 
Yet  such  a  difference  as  we  do  find  is  almost  unbelievable. 
Nor  has  the  increase  of  the  companies*  investment  been 
a  reckless  increase,  if  we  may  take  the  standard  set  by  the 
municipalities  as  our  criterion.  In  fact  the  former  have 
relatively  a  good  deal  more  to  show  for  their  increased 
investment  than  have  the  latter.  Under  these  circum- 
stances, the  results  of  municipal  ownership  herein  discov- 
ered are,  to  say  the  least,  rather  surprising.  The  public 
plants  have  apparently  played  reasonably  safe;  but,  unless 
all  signs  fail,  they  have  done  so  at  a  considerable  sacrifice 
of  that  service  which  they  might  legitimately  be  expected 
to  render.  And  this  is  probably  the  most  decisive  consid- 
eration in  the  argument  for  or  against  public  ownership.  ^ 

The  distribution  investment  per  mile  of  line  was,  in 
1910,  $600  for  the  municipalities  and  $574,  or  4  per  cent 
less,  for  the  companies.  In  1915  the  figures  had  changed 
to  $430  for  the  former,  a  decrease  of  28.3  per  cent,  and  to 
$624  for  the  latter,  an  increase  of  9  per  cent.  But  this  fig- 
ure includes  the  conduits,  which  we  must  ehminate  in 
order  to  secure  comparable  data,  whereupon  the  com- 

»  Cf.  ch.  XI.  pp.  309,  340-342. 


p 


IN  MASSACHUSETTS 


171 


pany  distribution  investment  per  mile  of  line  drops  to  only 
$420,  a  decrease  of  27  per  cent,  and  absolutely  about  2.3 
per  cent  lower  than  that  of  the  public  plants.    But,  in 
order  to  make  the  comparison  really  valid,  we  must  go 
still  farther  and  eliminate  those  new  poles  which  the  com- 
panies have  installed  m  addition  to  the  number  which, 
with  their  correspondingly  more  extensive  business,  they 
would  have  installed,  had  they  pursued  the  policy  adopted 
by  the  municipal  plants.  When  a  reasonable  deduction  is 
made  on  this  account,  the  distribution  investment  per 
mile  of  line  becomes  for  the  companies  $350  to  $375,  or 
from  15  to  20  per  cent  lower  than  the  investment  of  the 
public  plants!  Probably  the  reader  will  now  be  sufficiently 
satisfied  that,  so  far  as  we  can  secure  the  evidence,  the 
greater  increase  in  investment  of  the  private  plants  not 
merely  has  been  fully  accounted  for,  but  they  even  seem 
to  have  gotten  a  good  deal  more  for  their  money  than 
have  the  municipahties.  Aside  from  any  theorizing,  these 
appear  to  be  the  faxits. 

As  it  has  frequently  been  alleged  that  the  municipal 
plants  taken  over  from  private  ownership  have  been  at  a 
decided  disadvantage  inasmuch  as  they  paid  too  much 
for  the  property  which  they  acquired,  a  passing  comment 
should  be  made  upon  the  actual  state  of  affairs  which  our 
analysis  reveals.  Accordingly,  it  appears  that  for  the  6 
plants,  —  Chicopee,  Hudson,  Hull,  Middleborough,  Taun- 
ton, and  Westfield  (Wakefield  is  omitted  because  it  had 
definitely  ceased  to  generate  current  eariy  in  the  year 
1914-15),  —  the  total  investment  per  kilowatt  capaxiity  of 
generators  is  only  $154,  or  12.5  per  cent  lower  than  the 
average  for  the  group,  $176!  And  this  is  in  spite  of  the 
fact  that  two  of  the  plants  included,  Chicopee  and  Hull, 
were  buying  a  large  proportion  of  their  current,  and  hence 
have  had  no  reason  for  increasing  their  generating  ca- 
pacity. Furthermore,  Taunton  and  Westfield  have  the 
lowest  per  capacity  investment  of  any  in  the  group  of 


II 


I 


f 


172 


MUNICIPAL  ELECTRIC  LIGHTING 


I, 


public  plants,  $111  and  $113  respectively.  The  station 
investment  per  kilowatt  capacity  is  $108  as  opposed  to 
$101  for  the  group  —  a  condition  easily  explained  in  view 
of  the  fact  that  so  much  current  is  being  purchased.  The 
line  investment  per  mile,  on  the  other  hand,  is  $500,  or 
about  one  sixth  higher  than  the  average  for  the  group; 
but  this  investment  was  acquired  long  after  the  plants  had 
become  municipaUzed!  Holyokc,  as  might  be  expected, 
makes  a  better  showing  in  all  of  these  regards  than  do  most 
of  the  other  plants  in  either  group,  the  total  investment 
per  kilowatt  capacity  being  only  $112.*  Obviously  there 
is  absolutely  no  ground  for  the  above  mentioned  charge. 

Some  additional  analyses  must  be  made  of  the  total 
plant  investment.  It  appears  that  the  total  investment 
per  kilowatt  hour  supplied  is  20  cents  in  the  municipal 
plants  and  22  cents  in  the  other  group.  While  this  has 
remained  practically  stationary  in  the  latter,  in  the  case 
of  the  former  there  has  been  a  decrease  of  23  per  cent,  from 
26  cents  in  1910.  This  would  seem  to  be  an  excellent  show- 
ing for  the  public  plants  were  it  not  that  we  have  discov- 
ered how  the  decrease  has  been  effected.  Again,  the  in- 
vestment per  kilowatt  connected  load  is  $126  in  the  com- 
panies and  only  $100  in  the  other  group.  And,  finally,  the 
investment  per  customer  has  decreased  in  both  cases,  but 
about  twice  as  rapidly  for  the  puhfic  plants,  so  that  the 
figures  now  stand  at  $162  for  the  latter  and  $226,  or  nearly 
40  per  cent  more,  for  the  former. 

In  view  of  the  relations  here  set  forth,  which  scarcely 
need  further  explanation  after  what  has  already  been  said 
about  the  physical  equipment  and  the  investment  of  the 
two  groups,  we  might  logically  exp)ect  the  rates  charged 
by  the  companies  for  the  same  kind  of  service  to  be  higher 
than  the  rates  of  the  municipal  plants,  for  they  would 
need  to  secure  a  return  on  a  relatively  larger  investment 

*  The  private  plant  of  Attleborough,  however,  greatly  betters  thii 
leoord,  with  a  total  investment  per  kilowatt  capacity  of  only  $90. 


IN  MASSACHUSETTS 


173 


per  customer.  Had  the  increased  investment  been  reck- 
lessly incurred,  we  could  bring  a  serious  charge  against 
the  companies.  But,  since  the  contrary  is  evidently  the 
case,  inasmuch  as  the  additions  to  plant  account  have 
been  for  the  purpose  of  taking  better  care  of  the  trade,  it 
appears  that  the  private  plants  are  to  be  praised  rather 
than  condemned. 

The  per  capita  investment,  due  to  niunerous  reasons 
already  reviewed,  while  lower  for  the  companies  in  1910, 
has  increased  much  more  rapidly  than  that  of  the  public 
plants  (44.9  per  cent  as  opposed  to  9.2  per  cent),  until  the 
amount  is  now  $18.48,  or  30  per  cent  higher  than  the  per 
capita  investment  of  the  latter  ($14.20).  In  view  of  our 
findings  on  the  subject,  this  appears  to  indicate  a  rela- 
tively greater  expenditure  of  30  per  cent  for  the  purpose 
of  giving  the  people  better  service. 

Finally,  it  is  highly  significant  to  note  that,  while  the 
public  plants  have  reduced  their  investment  per  dollar  of 
operating  income  by  17.5  per  cent,  from  $5.27  to  $4.35, 
the  companies,  when  the  street  lighting  income  has  been 
deducted  in  order  to  make  the  data  comparable,  have 
actually  increased  their  investment  per  dollar  of  operating 
income  from  $4.20  to  $4.60,  or  9.5  per  cent.  This  fact  fur- 
nishes us  tentative  proof  that  the  latter  are  not  keeping 
their  rates  higher  because  of  their  increased  investment, 
but  rather  that  they  are  investing  far  ahead  of  their  pres- 
ent returns.    The  public  plants,  on  the  contrary,  in  the 
fight  of  the  facts  which  we  have  examined,  (a)  must  be 
charging  more  for  service  than  the  comparative  condi- 
tions would  warrant,  or  (6)  they  may  be  restricting  their 
investment  and  picking  their  business,  or  (c)  they  may 
simply  be  unusually  fortunate  in  the  territory  which  they 
happen  to  serve.   The  second  and  third  of  these  assump- 
tions have  ah-eady  been  found  to  be  true;  the  first  possi- 
bility will  be  presently  examined. 

Before  leaving  the  discussion  of  the  investment  statis- 


t 


I 

I 


174 


MUNICIPAL  ELECTRIC  LIGHTING 


tics,  attention  must  be  directed  to  one  other  important 
feature,  namely,  the  comparative  amount  of  new  con- 
struction found  in  the  two  groups  during  the  year  1914- 
15.  As  the  companies  keep  their  books,  the  gross  addi- 
tions to  plant  account,  including  renewals  from  deprecia- 
tion, was  $406,795,  or  8  per  cent  of  the  book  value.  The 
net  addition  during  the  year,  after  depreciation  and  all 
other  credits  have  been  deducted,  was  $267,345,  or  5.3 
per  cent  of  the  book  value.  This  was  36.5  per  cent  below 
the  average  annual  increase  in  investment  during  the  five- 
year  period,  $421,827  —  a  condition  which  can  probably 
be  accounted  for  by  the  abnormally  high  cost  of  material 
during  the  latter  portion  of  the  year. 

The  municipal  plants  report  a  gross  increase  in  plant 
account,  including  new  construction  from  all  sources  as 
well  as  renewals  from  depreciation,  of  $150,640,  or  6.8 
per  cent  of  the  depreciated  value.  But  the  net  addition  to 
plant  account,  after  depreciation  and  other  credits  have 
been  deducted,  is  only  $34,994,  or  1.6  per  cent.  This  is 
the  figure  comparable  with  the  5.3  per  cent  net  increase  in 
the  case  of  the  companies,  and  is  relatively  only  30  per 
cent  as  high  as  the  latter,  and  absolutely  only  13.1  per 
cent  as  great.  To  be  sure,  if  the  rate  of  depreciation  writ- 
ten off  had  been  as  low  in  the  municipalities  as  in  the  com- 
panies, this  net  increase  would  have  been  probably  from 
$50,000  to  $60,000  higher,  or  perhaps  about  4  per  cent  of 
the  depreciated  plant  account.  But  this  would  not  be 
an  accurate  comparison,  for  under  these  circumstances  we 
should  have  to  compare  the  addition  with  a  theoretical 
investment  in  plant  which  had  been  depreciated  at  the 
same  rate  as  the  company  plants. 

The  amount  actually  charged  to  construction  accounts 
during  the  year,  exclusive  of  any  payments  from  depre- 
ciation fund,  was  in  the  municipal  plants  $80,098.  This 
is  the  addition  which  api>ears  in  the  "total  plant  cost," 
and    should    probably   be    further   increased    by   about 


f 


IN  MASSACHUSETTS 


175 


$12,000  which  was  used  for  construction  out  of  earnings 
(not  including  Holyoke,  of  course).   Thus  the  additions 
during  the  year  would  be  about  $92,000,  or  3.2  per  cent  of 
the  total  investment.  But  it  must  be  remembered  that  no 
depreciation  has  in  this  case  been  written  off.  The  figure 
most  nearly  comparable  in  the  case  of  the  companies 
would  be  the  gross  additions  to  plant  account  ($406,795) 
less    the    total    depreciation    written  off    ($49,232), ^  or 
$357,563,  which  is  7.3  per  cent  of  the  total  investment  at 
the  beginning  of  the  year.  Reckoned  in  this  manner,  the 
addition  to  municipal  plants  during  the  year  would  be 
absolutely  only  26  per  cent  as  great  as  the  additions  to 
private  plants,  and  relatively  only  44  per  cent  as  great. 
Finally,  the  average  annual  increase  in  municipal  plant 
investment  during  the  past  five  years  has  been  $117,398, 
while  the  increase  in  total  plant  cost  for  1914-15,  as  car- 
ried on  the  books  ($80,098),  was  32  per  cent  less  than 
this  amount.   All  of  these  data  simply  confirm  the  above 
demonstrated  fact  that  the  public  plants  are  following  a 
very  conservative  policy  in  comparison  with  the  com- 
panies. Since  the  additions  during  the  year  were  relatively 
less  than  the  five  year  average  annual  additions  by  an 
almost  equal  ratio  in  both  groups  of  plants,  it  is  probably 
safe  to  assume  that  the  abnormal  market  conditions  were 
responsible  for  the  decrease. 

Brief  mention  should  be  made  of  the  balance  sheets 
of  the  two  groups.  The  12  municipal  generating  plants  in 
operation  in  1897  (the  first  year  when  the  data  are  clearly 
available)  showed  a  net  deficit  of  $82,558.  In  1900  the 
deficit  had  become  $172,833  for  14  plants,  and  in  five 
years  more  it  had  grown  to  $338,955  for  the  18  generating 

»  The  amount  of  depreciation  written  o/  in  a  given  year  by  a  group 
of  companies  does  not  necessarily  coincide  with  the  actual  charges  for 
depreciation  during  the  same  period.  This  is  due  to  the  fact  that  sonic 
plants  carry  their  depreciation  under  liabilities,  as  a  reserve,  frequently 
invested  m  the  business,  and  do  not,  therefore,  reduce  their  capital  ac- 
counts. 


176 


MUNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


177 


plants  under  consideration.  By  1910,  however,  the  net 
deficit  had  been  reduced  to  a  total  of  $281,796,  excluding 
Holyoke.  Of  the  17  plants  at  this  date  5  report  a  surplus 
of  $78,926  and  12  a  deficit  of  $360,722.  In  1915,  8  report 
a  surplus  of  $181,210,  while  9  show  a  deficit  of  $236,469, 
so  that  the  net  deficit  is  reduced  to  $55,259.*  Holyoke, 
with  a  httle  surplus  of  $6,254  in  1910,  now  boasts  a  sur- 
plus of  $401,419,  apparently  due  to  the  fact  that  a  good 
share  of  its  maturing  indebtedness  has  been  paid  off  out 
of  earnings.  This  has  also  occurred  on  a  very  small  scale 
in  two  or  three  other  plants. 

The  relatively  rapid  growth  in  the  size  of  the  net  deficit 
after  1900  was  partially  occasioned  by  the  scrapping  of 
some  of  the  now  antiquated  equipment  which  had  been 
taken  over  a  few  years  previously  from  private  owners  — 
a  kind  of  depreciation  with  which  many  municipalizers 
have  failed  to  reckon,  and  which  makes  the  annual  rate 
of  depreciation  difficult  to  standardize.  Part  of  the  deficit, 
also,  has  been  the  result  of  inefficient  financial  management. 
The  figures  in  general  indicate  that  the  municipal  plants 
are  beginning  to  find  their  financial  feet,  largely  through 
a  policy  of  ultra-conservatism  during  the  past  few  years. 
As  a  number  of  them  cease  to  generate  current,  however, 
as  is  the  present  tendency,  they  will  Gad  themselves  bur- 
dened with  a  large  amount  of  "dead"  assets,  against  which 
they  have  to  date  been  able  to  make  no  provision.  ^  Had 
the  public  plants  received  an  income  from  street  lighting, 
they  might  now  show  an  appreciable  surplus  since  they 
have  no  taxes  to  pay,  and  are  reheved  of  numerous  other 
expenses.  This,  however,  would  not  be  a  true  surplus,  as 
will  presently  be  made  clear.  ^ 

Of  the   17  companies  studied,  15  show  a  surplus  of 

*  In  the  case  of  composite  plants  the  surplus  or  deficit  has  been  roughly 
divided  according  to  the  ratio  which  the  total  cost  of  the  gas  plant  bears 
to  the  total  cost  of  the  electric  plant. 

»  Cf.  ch.  XI,  pp.  320-321.  »  Cf.  ch.  viL 


$800,528,  a  growth  of  52.3  per  cent  over  their  1910  surplus 
of  $525,734.  While  2  of  the  smaller  plants  (Buzzard's  Bay 
and  Vineyard)  reported  a  negligible  deficit  at  both  dates, 
the  net  surplus  for  the  group  is  equal  to  15  per  cent  of 
the  entire  investment.  This  is  a  remarkably  good  showing 
as  compared  with  the  public  plants,  and  would  seem  to 
indicate  that,  as  so  goodly  a  surplus  has  been  built  up 
out  of  earnings,  the  financial  management  of  the  com- 
panies has  been  all  that  could  reasonably  be  desired,  even 
though  in  some  cases  it  may  not  have  been  ideal. 

As  to  the  ftiethods  of  financing  their  business,  it  appears 
that  the  12  companies  doing  a  purely  electric  business  have 
59.5  per  cent  of  their  total  capital  and  loan  liabilities 
($3,563,964)  in  the  form  of  stock,  20.1  per  cent  in  notes, 

17.7  per  cent  in  bonds,  and  2.7  per  cent  is  represented  by 
premiums  realized  from  the  sale  of  capital  stock.  The 
outstanding  indebtedness  of  the  14  similar  municipal 
{)lants  ($1,351,682)  consists  of  82.2  per  cent  bonds  and 

17.8  per  cent  notes. 

Finally,  while  the  aggregate  indebtedness  of  the  munici- 
pal plants  has  increased  10.9  per  cent  during  the  past  five 
years,  the  ratio  which  this  bears  to  the  total  investment 
has  actually  decreased  from  60.3  per  cent  to  53.4  per  cent. 
This  is  accounted  for  by  the  fact  that  a  considerable 
portion  of  the  bonds  and  notes  have  been  paid  off  by 
means  of  appropriations  from  the  tax  levy,  and  in  a  few 
eases,  as  suggested  above,  by  payments  from  earnings. 
The  per  capita  indebtedness  has  remained  practically 
constant  ($7.85)  during  the  period,  and  the  ratio  which 
the  indebtedness  bears  to  the  total  municipal  indebtedness, 
for  all  purposes  (16.3  per  cent),  has  also  been  subject  to 
little  change  during  the  period. 

It  is  sufficiently  obvious  that  few  risks  are  now  being 
taken  by  the  municipalities.  The  public  lighting  business 
appears  to  have  been  in  a  relatively  quiescent  state  during 
the  past  few  years.    It  is  highly  probable,  however,  that 


178 


MUNICIPAL  ELECTRIC  LIGHTING 


within  the  next  period  of  5  to  10  years  there  will  be  a  rapid 
debt  expansion,  occasioned  by  the  necessity  of  bringing 
the  equipment  up  to  date  and  meeting  the  needs  of  new 
business;  or,  in  lieu  of  that,  there  may  be  a  general  scrap- 
ping of  generating  plant,  and  a  resort  to  the  use  of  pur- 
chased ciurent  wherever  possible. 

Summary 

The  more  important  findings  of  the  present  chapter 
may  be  briefly  summarized  as  follows: 

1.  Because  of  the  lack  of  uniformity  and  the  unsatis* 
factory  character  of  the  prescribed  accounting  methods, 
it  is  diflScult  to  get  wholly  comparable  investment  figures. 
Those  chosen,  however,  will  if  anything  tend  to  put  the 
companies  at  a  disadvantage  in  relation  to  the  public 
plants. 

2.  It  is  evident  that  the  investment  in  the  private  plants 
has  increased  much  more  rapidly  during  the  five-year 
period  than  has  that  of  the  municipal  plants. 

3.  This  more  rapid  increase  in  investment  is  readily  and 
fully  accounted  for,  however,  by  the  growth  of  under- 
ground construction  in  the  former,  by  the  far  more  rapid 
increase  in  length  of  lines,  the  installation  of  a  propor- 
tionately greater  number  of  poles,  the  greater  increase  in 
the  size  of  generating  units,  the  more  rapid  increase  in 
number  of  customers  and  in  street  lights,  etc. 

4.  Though  the  investment  per  kilowatt  capacity  of 
dynamos  is  considerably  greater  for  the  companies,  this  is 
explained  by  some  of  the  reasons  just  mentioned,  as  well 
as  by  the  fact  that  their  investment  in  real  estate  is  much 
higher  relatively  than  that  of  the  other  group,  due  to  more 
adequate  stations,  etc.  In  fact  a  number  of  the  municipal 
plants  carry  no  account  for  land,  as  it  is  owned  by  the 
municipality,  and  many  of  their  buildings  have  been 
found  to  be  highly  unsatisfactory. 

5.  The  pubUc  plants,  in  spite  of  the  fact  that  they  are 


IN  MASSACHUSETTS 


179 


purchasing  relatively  more  current  than  are  the  other 
group,  have  been  increasing  their  station  investment  far 
more  rapidly  than  their  line  investment,  while  the  opposite 
has  taken  place  in  the  companies.  But,  since  the  former 
have  been  shown  to  lag  behind  the  growth  of  the  com- 
munity rather  than  to  lead,  it  would  appear  that  we  have 
another  evidence  of  an  undue  attempt  to  restrict  the 
extension  of  service  only  to  the  more  promising  customers. 

6.  The  earlier  deficits  of  the  municipal  plants  are  being 
gradually  wiped  out,  largely  as  a  result  of  the  advantage 
gained  from  relatively  more  favorable  territory,  and  due 
also  to  an  immistakable  policy  of  great  conservatism.  The 
companies,  on  the  other  hand,  though  they  have  taken 
greater  chances,  have  been  constantly  building  up  their 
surplus. 

7.  Holyoke,  in  the  matter  of  investment,  does  not,  in 
the  main,  seem  to  have  any  noticeable  advantage,  par- 
ticularly if  due  allowance  be  made  for  size  and  for  the  com- 
pact nature  of  the  territory  served.  As  it  will  appear  later, 
also,  there  is  now  need  of  a  greatly  increased  investment 
in  station. 


CHAPTER  VI 

FINANCIAL  STATISTICS  OF  GENERATING  PLANTS 

(coniinued) 

Operating  Expenses  and  Operating  Income 

The  point  has  now  been  reached  at  which  most  stu- 
dents of  the  subject  of  municipal  electric  lighting  begin 
the  superficial  investigations  which  lead  to  their  hasty  con- 
clusions. To  the  writer,  however,  the  vital  issues  appear  to 
lie  much  too  deep  to  be  discovered  and  decided  by  a  mere 
examination  of  the  income  and  expense  accounts  together 
with  a  few  vague  generali^tions  about  rates.  As  the 
most  obvious  function  of  public  service  commissions  is  that 
of  rate  regulation,  the  public  and  the  average  student 
usually  over-emphasize  this  one  aspect  of  the  problem,  for- 
getting, or,  rather,  not  even  surmising,  that  back  of  all 
this  specious  analysis  are  a  myriad  of  considerations,  some 
of  them  highly  technical  and  others  more  general,  which 
must  constantly  be  borne  in  mind  if  regulation  is  to  be 
anything  more  than  blind  restriction  or  futile  interference. 
The  investigator  who  attempts  to  decide  the  case  for 
or  against  municipal  ownership  by  the  elementary  study  of 
the  charge  for  service  and  its  apparent  cost  under  pubhc 
operation  as  compared  with  that  of  similar  service  ren- 
dered by  private  enterprise,  is  accomplishing  little  more 
than  the  man  who  would  commit  suicide  by  shooting  at 
his  reflection  in  a  mirror.  The  one  who  compares  the  exist- 
ing rates  under  municipal  ownership  with  the  rates  which 
might  have  been  or  were  under  private  ownership,  and  so 
makes  out  his  case  for  one  side  or  the  other,  is  usually 
wasting  his  time.  With  regulation  such  as  we  find  in  Massa- 
chusetts, as  well  as  in  many  other  States  at  the  present 


MUNICIPAL  ELECTRIC  LIGHTING  181 

time,  it  is  generally  posable  for  the  people  to  secure  their 
full  pound  of  flesh  from  any  public  service  corporation 
whatever,  provided  they  avail  themselves  of  theu-  rights. 
Hence  we  are  primarily  concerned  with  what  w,  in  the 
matter  of  rates  and  costs,  and  with  what  to  been  and  wiU 
be,  in  the  matter  of  physical  equipment  and  extension  and 

conduct  of  service. 

Nevertheless,  since  a  reasonable  perspective  has  now 
been  developed,  it  will  be  worth  our  while  to  give  some 
attention  to  the  methods  and  results  of  operation  of  our 
groups  of  plants  during  the  year  1914-15,  with  occa- 
sional  reference  to  the  year  1909-10.  Before  discussing  the 
price  paid  for  service  let  us,  accordmgly.  analyze  the  cost 
of  that  service. 

1.  Untt  Costs* 
The  total  operating  expenses  of  the  companies  per 
kilowatt  hour  deUvered «  decreased  18.6  per  cent,  from 
4  386  cents  in  1910  to  3.572  cents  in  1915,  while  the  ex- 
penses  of  the  public  plants  (Holyoke  excluded),  decreased 
from  4.340  to  3.766  cents,  or  13.2  per  cent.»  To  the  casual 
observer  this  might  seem  to  indicate  that  the  conditions 
are  about  the  same  in  the  two  groups,  and  that  the  public 
plants,  in  view  of  their  smaller  size,  are  making  a  relatively 
better  showing.  And,  indeed,  they  do  give  a  reasonably 
good  account  of  themselves. 

If,  however,  the  taxes  paid  by  the  companies  be  de- 
ducted, in  order  to  remove  one  of  the  most  obvious  addi- 

1  Appendix,  pp.  43JM41,  446-447.  . 

«  "Delivered"  means  "sold"  in  the  case  of  the  companies  and  in 
reference  to  the  pubUc  plants  it  includes  current  used  for  street  hghting 
as  well  as  current  sold  to  commercial  customers.  Sometunes.  however 
the  word  "sold"  is  used  indiscriminately  in  both  cases  to  mdude  aU 
current  "deUvered"  to  consumers,  whether  public  or  private. 

»  The  cost  per  kilowatt  hour  is  always  given  in  cents  or  decima^ 
thereof:  but  it  hardly  seems  necessary  to  repeat  the  word  cents  each 
time  the  figures  are  given.  Likewise  the  expression  unit  cost  wiU 
ordinarUy  be  used  instead  of  the  phrase  "cost  per  kilowatt  hour. 


t 


It 


i^^BHiiiii 


.pl 


182 


MUNICIPAL  ELECTRIC  LIGHTING 


tional  expenses  which  the  companies  incur,  since  municipal 
plants  are  not  taxed,  the  unit  costs  for  the  former  become 
4.100  in  1910  and  3.144  at  the  end  of  five  years  —  a  de- 
crease of  24  per  cent.^  In  other  words,  the  unit  operating 
expenses  of  the  municipal  plants  were,  in  1910,  about  6 
per  cent  higher  than  in  the  case  of  the  companies,  and, 
in  1915,  nearly  20  per  cent  higher.  While  there  has  been  a 
decrease  in  both  cases,  it  has  been  almost  twice  as  rapid 
for  the  private  plants.  If  we  should  go  further  and  deduct 
the  salaries  of  corporation  officials  (0.197  per  kilowatt  hour 
sold),  an  item  which  does  not  appear  in  the  municipal 
expenses,  the  unit  cost  of  the  companies  would  decrease 
to  2.947,  while  the  public  plants  would  show  a  figure  28 
per  cent  higher.  In  order  to  put  the  two  groups  on  an 
absolutely  equal  basis  for  the  purpose  of  studying  their 
operating  efficiency,  we  would  have  to  eliminate  a  number 
of  other  items  in  the  case  of  the  companies  and  make 
several  additions  in  the  case  of  the  municipalities.  But 
of  this  more  anon. 

Now,  to  be  sure,  some  allowance  should  be  made  for  the 
fact  that  the  companies  deliver  considerably  more  current 
than  the  other  group.  Yet  there  is  not  necessarily  much 
difference  between  the  total  unit  costs  of  a  plant  doing  a 
900,000  kilowatt  hour  business  annually  and  one  doing  a 
1,400,000  kilowatt  hour  business.  We  would  expect  a  far 
greater  difference  to  be  found  between  a  plant  which  de- 
livers 500,000  hours  and  one  which  dehvers  900,000  hours. 
However,  the  pubhc  plants,  which  increased  their  business 
from  a  little  more  than  500,000  hours  in  1910  to  nearly 
900,000  hours  at  the  end  of  five  years  reduced  their  unit 
costs  only  13.2  per  cent,  while  the  companies,  increasing 
their  current  sold  from  900,000  to  about  1,400,000  kilowatt 
hours,  reduced  their  costs  by  24  per  cent,  or  18.6  per  cent 
if  the  taxes  be  not  deducted  at  both  dates. 

I  The  unit  cost  for  taxes  increased  from  0.286  in  1910  to  0.428  in  1915. 
a  proportionate  growth  of  50  per  cent! 


IN  MASSACHUSETTS 


183 


The  fact  that  the  two  groups  stood  so  close  together  m 
1910,  in  spite  of  the  difference  in  size,  so  far  as  the  writer 
has  been  able  to  investigate,  seems  to  speak  well  for  the 
public  plants,  and  prima  fame  it  might  be  said  that  the 
companies  were  not  being  operated  as  efficiently  as  they 
should  be.    But  the  wide  spread  between  the  two  at  the 
present  time,  when  only  the  taxes  paid  are  eliminated, 
seems  more  difficult  to  justify.   Part  of  the  comparative 
improvement  is  a  result  of  the  decreased  amount  of  current 
unaccounted  for  in  the  companies  and  the  correspondingly 
increased  amount  in  the  case  of  the  pubUc  plants.    It  is 
also  the  result  of  more  businesslike  methods  of  operation 
along  other  lines.  We  must,  however,  analyze  the  different 
items  entering  into  the  expense  accounts  before  attempting 
to  draw  definite  conclusions. 

Table  26.  Operating  Expenses  per  K.W.H.  delivered 

(1914-1915) 


CUutpfexpenM 


Compante$ 
(cerda) 


Total 

Taxes 

Salaries  of  officers 

Total  —  taxes  deducted. ......... 

Total  —  taxes  and  salaries  of  officers 

out 

Cost  of  distribution.  •   •  •  •  •  —  •  "  •  •  • 
Cost  of  manufacturing  (per  K.W.U 

made) •  •  '••^J 

Labor   at   station   (per  K.W.H. 

ruflxlc)    ••  •♦•••••••••♦•••"••' 

Fuel  of  every  kind  (per  K.W.H 

made) •  •  • 

Coal  (per  K.W.H.  made) 


K.W.H.  generated  per  plant 

K.W.H.  delivered  per  plant. . .... 

K.W.H.  delivered    (street  lightmg 
out) 


Operating  expenses  (dollars) 


3.572 
0.428 
0.197 
3.144 

2.947 
0.648 

1.376 

0.408 

(14)     0.808 
(12)     0.742 

1,650,091 
1.437,544 

1,232,050 

$872,935 


(2) 
MunieipalUiea 
{cents)  ^ 


3.766 

•  •   • 

3'766 

S.766 
0.782 

1.829 

0.626 

(17)    0.915 
(15)    0.933 

1,024,023 
881,914 

670,276 

I 
$562,643 


Percenihff 
which  (2) 
exceeds  (1) 


5.4 

•  •  • 

•  •  • 

20.0 

24.0 

20.7 

33.0 

63.0 

13.2 
26.0 

—37.0 
—38.8 

—46.6 

—35.5 


I. 


»  Holyoke  omitted  here  as  elsewhere. 


184 


MUNICIPAL  ELECTRIC  LIGHTING 


Table  26  presents  in  a  concise  way  some  of  the  general 
relations  which  the  operating  costs  in  the  two  groups  bear 
to  each  other.  It  is  significant  to  note  that  in  all  of  the 
important  items  the  companies  show  a  greater  economy 
in  operation.  Reference  will  from  time  to  time  be  made 
to  these  relations. 

To  begin  with  the  manufactm-ing  costs,  ^  we  find  that 
the  graphs  are  surprisingly  parallel  for  the  two  groups, 
though  the  unit  cost  of  the  public  plants  (1.829)  is  33  per 
cent  higher  than  that  of  the  companies  (1.376).  In  each 
case,  three  of  the  plants  generating  less  than  600,000 
kilowatt  hours  are  abnormal  —  two  are  unusually  low, 
due  to  the  fact  that  water  ix)wer  or  oil  is  used  instead  of 
coal,  and  one  is  unusually  high.  Were  these  plants  elim- 
inated, the  curves  would  be  fairly  close  together,  with  the 
companies  usually  running  somewhat  lower.  If  the  one 
extreme  case  of  Buzzard's  Bay  were  left  out,  the  curve 
would  be  markedly  lower  for  the  companies  generating 
less  than  1,000,000  hours  than  for  the  corresponding  mu- 
nicipal plants.  For  plants  with  an  output  between  1,000,- 
000  and  2,500,000  hours  there  seems  to  be  little  evidence 
of  decreasing  costs  because  of  increasing  size  in  either 
group.  This  tendency  is  most  marked  for  plants  having 
under  500,000  kilowatt  hours  output,  although  it  is  plainly 
to  be  seen  till  the  1,000,000  size  is  reached. 

Excluding  Holyoke,  one  of  the  municipal  plants,  Mid- 
dleborough,  uses  some  gas  and  a  good  deal  of  water  for 
generation  of  current,  and  Mansfield  uses  nothing  but  fuel 
oil.  Hence  these  must  be  eliminated  if  we  wish  to  secure 
comparable  data  for  fuel  costs.  Of  the  companies,  like- 
wise, three  generated  what  Httle  current  they  made  by 
means  of  water  power  wholly,  and  so  must  be  left  out, 
together  with  two  others,  one  of  which  used  a  consider- 

*  The  "manufacturing"  cost,  as  required  in  the  returns,  covers  all 
the  expenses  "at  station"  connected  with  the  making  of  current,  in- 
duding  rentals,  repairs,  and  maintenance  of  plant. 


IN  MASSACHUSETTS 


185 


able  proportion  of  oil  and  the  other  some  water  wheels. 
Having  made  these  adjustments,  we  find  the  cost  of  coal 
to  be  0.742  for  the  12  companies,  and  0.933,  or  26  per  cent 
higher  for  the  15  public  plants.  If  all  fuel  of  every  kind, 
as  well  as  water  power  rentals,  be  included,  the  averages 
are  0.808  for  14  of  the  former,  and  0.015,  or  13.2  per  cent 
higher  for  17  of  the  latter.  The  fuel  cost  amounts  in  the 
one  case  to  58.6  per  cent  of  the  total  manufacturing  ex- 
penses, and  in  the  other  case  to  50  per  cent. 

The  chart  includes  the  fuel  costs  of  all  plants  reporting 
this  item.  The  two  low  points  on  the  mimicipaJ  plant 
graph  between  400,000  and  600,000  are  accoimted  for  by 
the  two  plants  above  referred  to,  using  oil  and  mostly 
water.  If  these  are  eUminated,  as,  of  course,  they  should 
be,  the  curve  would  conform  much  more  closely  to  that 
of  the  companies  for  plants  having  less  than  1,000,000 
kilowatt  hours  output.  As  the  three  small  plants  of  the 
latter  group,  which  use  only  water  power,  do  not  appear 
in  the  graph,  the  number  of  cases  taken  is  so  small  that 
it  is  futile  to  attempt  any  comparisons  at  this  point.  For 
the  larger  plants,  however,  with  the  noticeable  exception 
of  Weymouth,  the  companies  all  show  a  considerably  lower 
fuel  cost  than  the  public  plants. 

According  to  an  earlier  chart  the  private  plants  have, 
on  the  average,  some  advantage  in  the  number  of  watts 
generated  per  pound  of  coal,  or,  expressed  differently,  they 
are  using  about  15  per  cent  less  coal  per  kilowatt  hour 
(4  pounds)  than  are  the  municipal  plants  (4.600  pounds). 
They  also  appear  to  be  getting  their  coal  for  a  somewhat 
lower  price  per  ton  than  the  other  group,  $4.15  for  the 
12  companies  as  opposed  to  $4.46,  or  7.4  per  cent  more,  for 
the  pubHc  plants.  (If  all  of  the  coal  bought  by  the  two 
groups  is  included,  the  excess  of  cost  for  the  public  plants 
becomes  only  5  per  cent  —  $4.46  as  against  $4.25  for  the 
other  group).  But,  when  we  compare  this  excess  in  price 
paid  per  ton  with  the  excess  in  unit  costs  (26  per  cent). 


It 


186 


MUNiaPAL  ELECTRIC  LIGHTING 


we  can  see  clearly  what  was  not  altogether  evident  in  the 
former  chapter,  that  it  must  be  a  question  of  appreciably 
better  fuel  economy  in  the  companies,  secured  by  the  more 
liberal  use  of  economic  appUances  and  by  the  exercise  of 
greater  care,  for  the  load  factors  of  the  larger  plants  are 
about  the  same  in  either  case,  and  yet  these  are  the  ones 
which  show  the  widest  divergence  in  cost  for  this  item. 
Nor  does  it  seem  that  there  is  any  particular  tendency 
toward  decreasing  unit  costs  of  fuel  for  plants  ranging  in 
output  from  1,000,000  to  about  2,500,000  kilowatt  hours. 
Consequently  the  advantage  possessed  by  the  private  plants 
can  scarcely  be  attributed  to  mere  size. 

In  this  connection  attention  must  be  called  to  the  sur- 
prising fact  that  Holyoke,  notwithstanding  its  size,  and 
even  tiiough  it  uses  some  water  power,  is  surpassed  in  fuel 
economy,  according  to  this  unit  cost  analysis,  by  one  other 
public  plant,  and  by  three  private  plants.  Its  cost,  includ- 
ing water  power  rental,  is  0.669,  while  that  of  Taunton  is 
0.664.  Of  the  other  group  Plymouth  shows  a  cost  of  0.646, 
though  it  is  one  seventh  the  size  of  Holyoke,  North  Adams, 
0.618,  and  Attleborough,  0.581. 

The  other  important  item  in  the  manufacturing  ex- 
penses, "wages  at  station,"  presents  some  interesting 
relations.  In  the  first  place,  while  it  constituted  30  per 
cent  of  the  total  station  costs  in  the  case  of  the  companies, 
and  34.2  per  cent  in  the  municipalities,  its  unit  cost  was 
relatively  53  per  cent  higher  in  the  latter  than  in  the 
former.  This  is  really  a  surprisingly  large  difference.  To 
be  sure,  the  number  of  poimds  of  coal  handled  per  kilo- 
watt hour  generated  is  from  12  to  15  per  cent  greater  in 
the  public  plants,  and  a  rough  relation  might  be  expected 
to  exist  between  the  station  wages  and  the  amount  of 
coal  consumed.  This,  however,  would  not  be  enough  to 
account  for  the  divergence. 

Upon  an  examination  of  the  accompanying  graphs,  it 
becomes  sufficiently  obvious  that,  while  there  is  a  close 


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IN  MASSACHUSETTS 


187 


correspondence  between  the  unit  costs  for  labor  in  both 
groups  for  plants  generating  more  than  1,000,000  kilowatt 
hours,  the  companies  under  this  size  have  a  decided  advan- 
tage over  the  municipal  plants.  If  the  one  extreme  case  of 
Buzzard's  Bay  be  omitted,  the  graph  for  the  private  plants 
runs  invariably  much  lower  at  this  stage.  On  the  other  hand, 
if  the  three  companies  generating  by  means  of  water  power 
be  left  out,  though  they  are  too  small  to  have  any  notice- 
able effect  upon  the  averages,  the  curves  would  not  be  so 
far  apart.  But  the  company  graph  would  still  run  lower, 
particularly  when  we  eliminate  the  oil  using  plant  of  Mans- 
field, and  Merrimac,  which  probably  secures  some  unac- 
counted for  labor  from  the  water  department,  perhaps 
included  in  the  item  "rent  of  station." 

Upon  the  whole  it  appears  that  the  chief  reason  for  the 
higher  station  wages  of  the  public  plants  is  due  to  the 
fact  that  so  large  a  proportion  of  them  are  smaller  than 
the  companies,  and,  with  two  exceptions,  are  all  using  coal 
for  generation,  while  three  of  the  smaller  companies  use 
water  power,  and  thus  keep  this  cost  item  comparatively 
low.   Yet,  in  several  instances,  the  graph  runs  unreason- 
ably high  for  the  pubUc  plants.  The  eight-hour  municipal 
day,  possibly  higher  wages,  —  the  companies  do  not  return 
the  rate  of  wages  which  they  pay, —  and  the  sUghtly 
poorer  load  factor  of  the  latter,  may  further  help  to  explain 
the  difference,  without  recourse  to  the  time-honored  and 
threadbare  argument  that  pubUc  labor  is  less  efficient  than 
private  labor.^    Finally,  since  the  station  wages  of  the 
larger  plants  in  both  groups  are,  for  the  most  part,  not 
far  apart,  it  would  not  appear  that  there  has  been  a  greater 
utilization  of  labor-saving  devices  by  one  than  by  the  other. 
Of  the  remaining  items  entering  into  the  manufacturing 
expenses,  little  need  be  said.    It  appears  that  the  pubhc 
plants  are,  with  two  exceptions,  paying  for  the  water 

1  The  local  survey,  however,  has  convinced  the  writer  that  there  ia 
a  good  deal  of  truth  in  the  "efficiency"  argument. 


188 


MUNICIPAL  ELECTRIC  LIGHTING 


which  they  use,  though  at  a  somewhat  lower  rate  than  is 
paid  by  the  other  group  (0.029  as  compared  with  0.035), 
due  to  the  fact  that  the  municipahties  seem  to  be  making 
their  electric  plants  a  lower  rate  than  is  customary.  Their 
expenses  for  oil  and  waste  (0.032)  are  60  per  cent  higher 
than  the  companies  inciu*  (0.019),  and  for  distribution 
tools  and  appliances  they  are  spending  three  times  as 
much  as  the  latter  (0.032  as  opposed  to  0.012).  The  diflfer- 
ence  in  the  first  case  is  probably  largely  the  result  of  the 
economies  which  arise  from  greater  output  of  current  per 
plant,  while  in  the  second  case  it  seems  to  be  partially 
waste.  For  repairs  of  all  kinds  at  station  ("station  struc- 
ture, steam  plant,  and  electric  plant")*  the  apparently 
higher  cost  of  the  municipal  plants  is  mostly  accounted  for 
by  the  fact  that  Hull  charged  the  installation  of  a  new 
boiler  to  the  operating  accounts.  With  this  anomaly  elim- 
inated, the  items  are  not  far  apart,  0.141  for  the  public 
plants  and  0.115  for  the  companies.  The  diflference  can 
probably  be  accounted  for  by  the  greater  output  of  the 
latter.  The  current  purchased  costs  about  the  same  in 
both  cases,  1.500  in  the  former  and  1.636  in  the  latter. 

The  expenses  of  "distribution,'*  as  returned  to  the 
Board,  are  too  indefinite  to  lend  themselves  to  any  con- 
elusive  analysis.  The  accounts  are  not  similarly  kept  by 
the  two  groups,^  and  many  of  the  individual  returns  are 
open  to  serious  question.  In  the  first  place,  the  wage  item 
for  the  companies  is  supposed  to  include  "wages  for  care 
of  lights,  meters  and  motors,  meter  reading,  clerical  labor, 
and  salary  or  commission  of  collectors."  In  the  municipal 
returns  the  directions  are  very  vague  on  this  point  — 
"wages  for  care  of  lights,  meters,  clerical  labor,  etc.," 
with  probably  a  good  deal  of  emphasis  on  the  et  cetera. 
Wages  of  linemen  are  supposed  to  be  entered,  not  here, 
but  under  "repairs  and  renewals  of  lines."  In  the  case  of 
the  companies,  however,  these  wages  were  formerly  en- 
^  Since  1915  there  has  been  some  improvement  in  this  regard. 


\ 


IN  MASSACHUSETTS 


1S9 


tered  under  the  general  item  of  distribution  wages,  and 
probably  some  of  them  still  follow  this  policy,  and  so 
cause  their  "wages"  to  appear  unduly  large  and  their 
"repairs  and  renewals  of  lines"  abnormally  small.  But, 
in  practice,  there  seems  to  be  much  overlapping  in  the  case 
of  the  wages  reported,  particularly  in  the  smaller  plants. 
Some  of  the  employees  are  doubtless  "jacks  of  all  trades," 
and,  from  station  expenses  to  general  office  expenses,  it  is 
largely  a  matter  of  chance  where  their  wages  shall  appear 
and  how  the  distribution  shall  be  made. 

In  1915,  for  the  first  time,  the  companies  were  required 
to  keep  the  "maintenance  and  renewals  of  street  lamps 
separate  from  that  of  commercial  lamps,  and  a  separation 
is  also  made  between  "repairs  and  renewals  of  lines  and 
conduits,"  and  "repairs  and  renewals  of  meters  and  trans- 
formers."  The  municipalities,  on  the  other  hand,  are  re- 
quired to  make  no  such  separations.  They  return  only  the 
items  of  "repairs  of  Unes,  arc  lamps,  and  meters,"  which 
corresponds  only  roughly  to  the  two  items  just  mentioned 
Ibr  the  companies,  and  "incandescent  lamps,"  which  m- 
dudes  both  municipal  and  conunercial  lamp  maintenance 
and  renewals,  though  the  arcs  appear  in  the  preceding 
entry.  About  the  only  thing  to  do  under  the  circumstances, 
is  to  group  together  all  of  the  items  of  repair  and  renewals 
or  maintenance  in  each  case,  as  the  writer  has  done  in  the 
toble  appended.   There  is  absolutely  no  way  of  discover- 
ing how  much  of  the  aggregate  expense  is  mamtenance 
and  how  much  is  renewal.    Nor  can  anything  more  than 
the  roughest  guess  be  made  as  to  how  much  of  the  cost  is 
due  to  material  and  how  much  to  labor. 

Bearing  in  mind  the  uncertainties  involved.  We  note  that 
the  reported  wages  are  26.5  per  cent  higher  for  the  com- 
panies (0.181)  than  for  the  municipal  plants  (0.143).  But, 
as  has  been  suggested,  probably  some  of  the  linemen's 
wages  are  here  included  by  the  former,  and  it  may  be  that 
the  latter  report  elsewhere  wages  which  should  be  entered 


190 


MUNICIPAL  ELECTRIC  LIGHTING 


'■i 


here.  One  municipal  plant,  Merrimac,  reports  no  distribu- 
tion wages  whatever.  The  individual  anomalies  are  so 
numerous  that  it  would  be  hopeless  to  try  to  accoimt  for 
them,  except  that  it  may  be  generally  stated  that  when 
the  commercial  and  street  Hghting  business  is  proportion- 
ately large,  the  wages  are  found  to  be  higher. 

For  distribution  tools  and  equipment,  it  also  appears 
that  the  public  plants  are  pajring  about  50  per  cent  more 
than  the  companies.  There  seems  to  be  no  rule  or  reason 
for  the  anomahes  which  here  present  themselves. 

The  expenses  for  repairs  and  renewals  of  all  kinds  run 
80  per  cent  higher  for  the  municipal  plants  (0.494  as  op- 
posed to  0.375).  This  seems  to  be  a  rather  large  differ- 
ence in  view  of  the  fact  that  the  municipal  plant  lines  are 
not  so  widely  extended  as  those  of  the  companies,  and  that 
they  do  not  have  relatively  so  many  poles  to  look  after. 
But,  as  suggested  above,  perhaps  a  greater  proportion  of 
wages  is  entered  here.  The  advantages  which  the  com- 
panies have  can  be  accounted  for  partially  by  the  fact  that, 
in  view  of  their  recent  rapid  extensions,  their  distribution 
equipment  is  comparatively  much  newer  than  that  of  the 
other  group,  and  partially  to  the  fact  that  not  all  of  their 
linemen's  wages  are  reported  in  this  item.  In  this  case  the 
underground  construction,  while  highly  important  for  the 
individual  plants,  does  not  seem  to  have  much  influence 
in  reducing  the  expenses,  since  it  is  found  principally  in 
only  two  plants,  and,  strange  to  say,  one  of  these,  Glouces- 
ter, reports  a  unit  cost  (0.891)  more  than  double  the 
average  for  the  group. 

Probably  this  is  one  of  the  instances  in  which  the  pubHc 
plants  are  not  so  highly  favored  as  far  as  their  labor  costs 
are  concerned.  This  is  a  more  highly  specialized  kind  pf 
work,  and  it  would  be  rather  difficult  to  combine  the  duties 
of  a  clerk  or  day  laborer  with  those  of  a  lineman.  Hence 
there  is  doubtless  less  overlapping  here  than  elsewhere. 
Furthermore,  experience  and  observation  teach  us  that 


IN  MASSACHUSETTS 


191 


h 


municipal  employees  who  have  work  to  do  along  the  pub- 
lie  highways,  whether  it  be  repairing  lines,  setting  poles, 
transplanting  trees,  or  even  shoveUing  dirt,  are  particularly 
prone  to  soldier  on  the  job.  Difference  in  size  of  plants 
would  play  Httle  if  any  part  m  this  item,  for  there  is  a  fairly 
close  relation  between  the  extent  of  the  distribution  sys- 
tem and  the  amount  of  current  delivered.  Countless  local 
considerations  may  affect  the  situation.  It  is  true  also  that, 
in  some  cases,  because  of  more  careless  initial  installation 
the  municipal  plants  now  find  it  necessary  to  expend  more 
on  repairs.  Definite  conclusions  could  be  drawn  only 
after  a  careful  study  of  this  item  over  a  period  of  yeaxs. 
The  year  taken  may  not  be  typical. 

The  distribution  cost  graph  of  the  companies,  with  the 
exception  of  Gloucester  and  Quincy,  which  do  primarily  a 
lighting  business,  runs  for  the  most  part  lower  than  the 
municipal  plant  graph  at  all  stages,  but  the  difference  is 
most  noticeable  for  the  smaller  plants.  Mere  size  of  plant 
and  extent  of  business  seem  not  to  enter  into  the  differ- 
ences which  here  exist,  unless  in  an  indirect  way. 

Among  the  expenses  which  the  writer  has  classified  as 
"management  and  miscellaneous,"  the  item  of  "general 
salaries"  seems  to  include  the  wages  of  most  of  the  "soft 
handed"  employees  as  well  as  the  salaries  of  the  munici- 
pal managers.  This  cost  appears  to  be  ahnost  twice  as 
high  in  the  municipal  plants  (0.270)  as  in  the  compames 
(0.146).  The  difference  may  be  in  some  measure  due  to  the 
fact  that  the  latter  are  larger,  for  the  necessary  number  of 
salaried  employees  does  not  change  greatly,  even  with  a 
considerable  mcrease  in  amount  of  current  sold.  Fur- 
thermore, there  may  be  inaccuracy  in  the  returns,— 
some  of  the  salaries  belonging  here  are  perhaps  hidden 
in  the  "general  office  expenses"  of  the  companies  which  are 
comparatively  high.  On  the  other  hand,  the  pubUc  plants 
have  probably  entered  under  this  head  some  of  the  wages 
which  should  have  been  included  in  distribution  wages. 


i 


in 


MUNICIPAL  ELECTRIC  LIGHTING 


which,  it  will  be  recalled,  were  unexpectedly  low.  There 
might  also  be  a  certain  number  of  municipal  employees 
serving  as  ornaments  and  thus  padding  the  pay  rolls.  And, 
finally,  some  of  the  corporation  officials  are  doing  work 
which  would  ordinarily  be  performed  by  salaried  employees. 

It  is  instructive  to  observe  that  the  "officers'  salaries" 
of  the  companies  (0.197)  exceeds  the  "general  salaries" 
by  35  per  cent,  and  that  the  sum  of  these  two,  0.343,  is 
27  per  cent  higher  than  the  "general  salaries  "  of  the  public 
plants.  Also,  salaries  of  the  municipal  light  boards  (0.022), 
of  which  12  are  receiving  some  remuneration,  exactly  coin- 
cide with  the  allowances  for  directors  of  the  companies. 

The  general  office  expenses  are,  as  has  been  suggested, 
70  per  cent  higher  in  the  companies  (0.230)  than  in  the 
other  group  (0.135).  This  difference  may  be  due  (a)  to 
inaccuracy  in  entering  the  wage  items  in  the  returns,  (b) 
to  wasteful  expenditure  on  the  part  of  the  companies,  and 
(c)  probably  in  large  measure  to  the  fact  that  many  of  the 
companies  do  a  good  deal  of  advertising  and  soliciting  of 
new  business,  whereas  the  public  plants  rarely  indulge 
in  this  form  of  expense. 

It  must  be  further  noted  in  considering  this  question 
that  a  number  of  the  public  plants  have  their  offices  in 
municipal  buildings,  for  which  they  pay  no  rent.  The 
total  amount  of  office  rental  paid  by  them  is  only  0.007, 
while  that  paid  by  the  companies  is  0.034.  This,  to  be  sure, 
is  a  very  small  item;  but  occasionally  some  of  the  public 
plants  also  receive  other  free  service  along  with  this  free 
room,  which  will  help  to  keep  the  office  expenses  low. 

Only  three  municipal  plants,  besides  Holyoke,  report  any 
auditor's  fees.  And,  since  no  charge  to  this  account  could 
well  be  hidden  in  the  general  office  expenses,  which  run  so 
low,  there  is  good  presmnptive  evidence  that  a  number  of 
the  plants  receive  free  service  from  the  municipal  auditor 
or  accountant,  as  is  the  customary  procedure.*  In  Uke 
*  This  presumption  was  fully  confirmed  in  the  local  survey. 


IN  MASSACHUSETTS 


lOS 


manner  the  law  expenses,  which  amount  to  0.019  m  the 
companies,  are  almost  too  small  to  be  recorded  m  the  other 
group.  While  this  may  mean  that  there  are  no  legal  ex- 
Lses  in  the  latter,  it  may  also  indicate  that  the  services 
of  the  city  solicitor  are  utUized  gratia.  No  note  seems  ever 
to  be  made  of  the  fact  that  the  town  or  city  treasurer 
contributes  a  great  deal  of  valuable  time  to  the  busmess 
of  handling  the  funds  and  loans  of  the  municipal  pla,nts. 
In  the  companies  a  good  deal  of  such  work  would  be  given 
over  to  a  high  salaried  ofiBcer. 

In  the  matter  of  bad  debts  there  seems  to  be  httle  to 
choose  between  the  two  groups,  and  the  insurance  charges 
are  also  about  the  same.  The  taxes  paid  by  the  companies. 
0  438,  seem  to  bear  absolutely  no  relation  to  the  amount 
of  investment  in  plant  or  the  extent  of  business  done. 
The  lowest  unit  cost  for  this  item  is  found  m  two  <jf  the 
smaller  plants,  Lee  (0.116)  and  Buzzard's  Bay  (0.147); 
but  the  next  lowest  cost  is  that  of  North  Adams  (0.171). 
which  has  the  largest  output  of  all.   On  the  other  hand, 
the  smaUest  plant  of  the  group.  Citizens',  shows  the  high- 
est expenditure  for  taxes  per  kilowatt  hour  dehvered. 
1.205,  and  one  of  the  largest  plants,  Beverly,  comes  next 
with  an  expense  of  0.849  under  this  head. 

So  far  as  the  total  operating  costs  are  concerned,  there 
b  UtUe  correspondence  between  the  graphs  of  the  two 
groups.    When,  however,  we  eliminate  the  two  extremely 
high  companies,  Gloucester  and  Quincy.  and  the  two  ab- 
normally low  ones,  Lee  and  Winchendon,  as  weU  as  the 
extraordinarily  high  municipal  plant  of  Hull,  the  curves 
come  reasonably  close  together,  with  the  companies  having 
only  a  slight  advantage  under  1,000,000  and  a  consid- 
erable disadvantage  from  that  point  to  3,000,000.    The 
latter  appear  to  make  no  remarkable  showmg,  particu- 
larly in  the  case  of  the  larger  plants. 

Now,  in  view  of  the  considerably  lower  coste  of  manu- 
facture and  distribution,  it  is  evident  that  the  higher  man- 


IM 


MUNICIPAL  ELECTRIC  LIGHTING 


agement  and  miscellaneous  expenses  (1.548  as  contrasted 
with  L155  in  the  public  plants),  are  responsible  for  the 
fact  that  the  companies  have  on  the  average  so  slight 
an  advantage  (3.572)  over  the  municipal  plants  (3.766). 
Nor  is  this  higher  cost  at  this  point  the  result  of  an  ex- 
cess expenditure  of  the  former  over  the  latter  in  items  com- 
mon to  both.  It  is  rather  accounted  for  by  additional 
expenses  not  found  in  the  returns  of  the  public  plants. 
The  effect  of  taxes  and  salaries  of  officers  has  ah-eady  been 
referred  to.  In  addition,  higher  office  expenses,  though 
probably  justified,  higher  legal  expenses,  higher  rentals, 
all  unite  to  make  the  showing  of  the  companies  worse  in 
comparison  with  the  municipal  plants. 

When  the  more  obvious  deductions  are  made  so  that 
we  can  compare  the  operating  efficiency  of  the  two  groups, 
we  find  that  while  the  management  and  miscellaneous 
expenses  run  somewhat  lower  for  the  companies  (0.923) 
than  for  the  other  group  (1.155),  the  difference  is  not  much 
more  than  would  be  expected  as  a  result  of  theu"  greater 
size.  The  very  fax^t  that  they  are  private  concerns  renders 
it  necessary  for  them  to  incur  some  expenses  which  munici- 
pal plants,  by  reason  of  their  public  ownership,  would 
not  be  subject  to. 

Furthermore,  the  law  of  decreasing  costs,  which  appears 
to  assert  itself  in  the  routine  part  of  the  business,  particu- 
larly m  the  generation  of  current,  is  of  rather  doubtful 
application  with  regard  to  the  important  items  entering 
into  the  miscellaneous  expenses,  including  taxes. 

Upon  the  whole,  however,  the  writer  does  not  feel  that 
the  companies,  in  spite  of  their  apparently  better  physical 
development,  have  done  so  well  in  their  actual  operation 
as  might  have  been  expected  under  more  efficient  manage- 
ment and  less  "control."  The  municipal  plants,  on  the 
contrary,  seem  in  general  to  have  been  operated  with  a 
higher  degree  of  efficiency  than  might  be  expected. 
So  far  as  Holyoke  is  concerned,  the  writer  does  not 


q 


sS  >cf*6t»  ^  N^^'>i>^^ 


IwTmI 


"^^^^ 


IN  MASSACHUSETTS 


105 


Table  27.  Percentage  Analysis  of  Expenses 
(Generating  Plants) 


Kind  of  expense 


Companiee 


'  Amouni 


I.  Operating  expenses  — 
General  analysis. 

Manufacture 

Purchase  of  current 

Distribution 

OflBce  expenses  and 
management . .  ■ . 
Miscellaneous 


$386,109 

30,239 

158,465 

153,755 

39,776 

Tai^" 104,591 


Per  cent 
of  total 


Total 

Total  —  taxes 
deducted . . . 

II.  Operating  expenses  — 
Detailed  analysis 
(taxes  out) 

Fuel 

Wages  at  station .  . 
Repairs  at  station . . 
Current  purchased. 
Distribution  wages. 
Repair  of  lines .... 
Distribution  tools 
and  equipment . . 
Gfcneral  salaries .  . 
Salary  of  officers . . 
Directors'  allow- 


$872,935 
$768,344 


ances ■•- 

Salary  of  munici- 
pal light  boards. 
General  office  ex- 


penses  

Insurance 

Rent  of  offices 

All  other  expenses. 


Total, 


44.4 

3.5 

18.2 

17.6 

4.5 

12.0 


$220,204 
114,590 
32,244 
30,239 
44,236 
91,633 

22,596 
35,781 
48,201 

5,388 


56,158 
30,703 

8,228 
28,143 


MunicipdUiee        iHolyoke 


Amouni 


$308.937 » 
35,491 
117,794 

65,428 
25,596 


Percent 
qftotd 


$553,246 


28.7 

14.9 

4.2 

4.0 

5.8 

11.9 

2.9 
4.7 
6.3 

0.7 


7.3 
4.0 
1.1 
3.7 


$158,648 
109,048 
24,663* 
35,491 
21,366 
74,094 

22,328 
40,750 


3,167 

20,285 

19,507 

1,120 

22,879 


55.8 

6.4 

21.3 

11.9 

4.6 


$768,344 


$553,246 


Per  ceni 
qfiotal 


28.7 

19.7 

4  4 

6.4 

3.9 

13.4 

4.0 

7.4 


70.7 

•  •   • 

16.9 

11.5 
1.7 


0.6 

3.7 
3.5 
0.2 
4.1 


49.8 

16.2 

3.7 

5.i 
10.3 

1.3 

7.7 


3.8 
1.2 

•   •   • 

1.3 


Hull,  new  boiler,  $9,307.  omitted. 


196 


MUNICIPAL  ELECTRIC  LIGHTING 


beKeye  that,  judging  by  the  statistics,  any  remarkable 
showing  has  been  made  when  we  consider  the  miusually 
favorable  district  which  this  plant  serves.  No  particular 
effort  seems  to  have  been  exerted  to  develop  new  terri- 
tory, and  the  amount  of  business  done  in  1914-15  was 
actually  less  than  in  the  preceding  year.^ 

The   accompanying   percentage   analysis   of   expenses 
(Table  27)  shows  the  relation  which  the  more  important 
items  discussed  bear  to  each  other.    It  appears  that  the 
items  of  cost  other  than  manufacture,  distribution,  and 
purchase  of  current,  constitute  a  very  large  proportion  of 
the  total  outlay  of  tie  companies,  34.1  per  cent,  as  com- 
pared with  only  16.5  per  cent  for  the  municipal  plants.  It 
is  rather  surprising  to  find  the  proportion  spent  for  fuel, 
when  taxes  have  been  deducted,  exactly  the  same  in  the 
two  groups.   The  total  expenditure  for  wages  and  salaries, 
including  directors'  allowances  and   the  salaries  of  the 
municipal  light  boards,  is  for  the  companies  32.4  per  cent 
of  all  outlays,  and  for  the  municipahties  31.5  per  cent. 
Taxes  and  salaries  of  oflScers,  it  will  be  observed,  account 
for  one  sixth  of  the  operating  expenses  of  the  former. 

2.  Rates  and  Income* 

The  public  in  general  are  more  interested  in  the  prices 
which  they  pay  for  service  than  in  the  cost  of  that  service 
to  those  who  supply  it.  Too  frequently  a  municipal  plant 
is  considered  a  success  simply  because  its  rates  are  low,  and 
a  private  plant  is  condemned  because  its  charges  are  high. 
Wliether  the  pressure  exerted  by  customers  for  the  reduc- 
tion of  rates  is  greater  in  the  case  of  the  former  than  the 
latter,  it  would  be  difficult  to  say.  Undoubtedly,  how- 
ever, without  the  proper  legal  restraints,  a  publicly  owned 
plant,  by  virtue  of  the  fact  that  it  can  cover  up  its  losses 
in  the  tax  levy,  would  be  more  subject  to  such  influences 

»  In  the  following  year  (1915-16),  there  was  a  very  marked  increase. 
•  Appendix,  pp.  442-453. 


IN  MASSACHUSETTS 


197 


i 


than  a  private  concern.  But.  with  such  laws  as  are  found 
in  the  state  of  Massachusetts,  it  is  practically  unpossible 
for  municipalities  to  lose  money  on  their  electric  busmess 
as  a  result  of  charging  too  htUe  for  the  services  rendered 
{they  cannot  seU  belmo  cod),  provided  they  conform  to  the 
reqmremenU  of  the  statute  as   discussed  m  an  earher 
chapter;'  nor  are  they  expected  to  make  any  considerable 
profit.^ '  On  the  other  hand,  it  is  comparatively  easy  to 
force  the  companies  to  make  such  charges  as  shall  leave 
them  only  a  "fair"  return  upon  a  conservative  invest- 
ment.' Hence  we  should  not  look  for  any  marked  differ- 
ences in  rates  between  the  two  groups.   Accordingly,  it 
appears  that  while  the  companies  reduced  their  unit  oper- 
ating  expenses  18.6  per  cent  during  the  period  studied,  their 
total  income  per  kilowatt  hour,  from  the  sale  of  current 
for  all  purposes,  has  decreased  15.7  per  cent.  The  munici- 
pal plants,  however,  while  reducing  their  unit  costs  by 
an  amount  equal  to  13.2  per  cent,  have  lowered  their 
average  rates  25.3  per  cent,  or  about  60  per  cent  more 
rapidly  than  the  former  group.  But  it  must  be  noted  that 
their  rates  in  1910  were  much  higher  than  the  company 
rates,  aiid  that  the  reduction  in  their  average  rate  has 
been  occasioned  ahnost  whoUy  by  the  growth  of  their 

power  business. 

Table  28  shows  the  close  correspondence  m  average 
rates  at  the  present  time.  The  spread  between  the  total 
operatmg  income  per  kilowatt  hour  sold  in  each  group, 
is  practically  negUgible.  But  when  the  income  from  other 
sources  than  the  sale  of  current,  such  as  steam  heatmg 
and  rentals,  if  such  there  be,  as  well  as  the  street  Ughting 
income  in  the  case  of  the  companies,  has  been  deducted, 
the  unit  mcome  is  found  to  be  5.461  for  the  latter,  and 
6  per  cent  higher,  or  5.786.  for  the  municipal  plants.  This 
difierence  is  not  noticeably  greater  than  the  difference  in 
the  unit  costs.  Finally,  if  only  the  income  from  the  com- 
.  «  P.  45.       —  •  Mass.,  1914,  ch.  742,  sect.  115.         •  Ibid.,  sect.  102. 


■I 


MUNICIPAL  ELECTRIC  LIGHTING 


Table  28.  Income  per  K.W.H.  sou)  (Holyoke  excluded) 


Item 


Total  operating  income 

Total  operating  income  (street 

lighting  out) 

Total  from  sale  of  current 

Total  from  sale  of  current 

(atreet  lighting  out) 

Commercial  light  and  power 

Commercial  lighting  > 

Street  lighting 


Power 

Bales  to  other  companies. 


Vet  income 

Net  income  (street  lighting  oat) 

Operating  inccnne  (dollars) .... 
Operating  income  (street  light- 
ing out) 


Net  inoome  (dollars^ 

Net  income  (atreet  lighting  oat) 


Operating  ratio , 

Operating  ratio  (street  lighting 
ont) 


1910 


Com- 
ptmiet 
{eenti) 


6.C08 

6.S31 
6.758 

&481 

iV.774 
7.675 

3.458 

2.700 


2.622 
0.986 

9953,675 

757,293 

312,685 
116,304 

•7.2 

84.5 


Sfunici- 
palitie* 

{eenU) 


7.960 

7.900 

7.742 

7.742 
11.077 


8.616 
3.000 


1.091 

•  •  •  • 

443,423 
62,202 

■  •  •  • 

86.0 


1916 


Com- 
panies 
(eenta) 


6.800 

6.B03 

5.764 

6.461 
6.960 

10.062 
7.676 

(7.333) 
3.047 
2.418 


2.227 
1.332 

$1,417,236 

1,162,594 

544,300 
279,658 

61.6 

76.0 


Mun  id- 

polities 

(cent*) 


6.895 

6.896 
6.786 

6.786 

5.800 

10.305 


2.683 
4.294 


0.967 

671,761 
109,118 

83.7 


Ptr  cent 
decrease 


Com- 
panies 


16.9 

15.7 
14.7 

15.7 

•  •  •  • 

14.5 
1.3 
(4.5)> 
11.9 
10.4 


11.7 

+35.2 

+47.6 

+62.2 

+74.0 
+140.8 

-8.3 

-11.2 


Munio- 

ipali- 

ties 


2G.0 

26.0 
25.3 

26.3 

•  ■  ■  • 

7.0 


28.6 
+43.1 


12.3 

•  •  •  • 

+61.5 

•  •  •  • 

+70.4 

•  •  •  • 

-2.7 


>  **  Commercial "  lighting  includes  all  other  than  street  lighting. 
*  Including  only  companies  reporting  at  both  dates. 

mercial  light  and  power  business  be  considered,  we  find 
that  for  the  companies  the  average  rate  is  5.d50,  and  for 
the  public  plants  5.800,  or  2.5  per  cent  lower. 

Now,  in  view  of  the  fact  that  there  is  comparatively 
little  difference  in  the  nature  of  the  business  done  by  the 
two  groups,  and  since  the  companies  have  been  effec- 
tively regulated  by  the  Board,  we  might,  as  has  been  sug- 
gested, logically  expect  an  approximate  equaUty  in  rates, 
provided,  however,  that  both  pay  taxes,  and  that  the  in- 
vestment per  customer,  with  the  resultant  fixed  charges, 
is  the  same.  But  here  we  find  a  conspicuous  difference. 
The  pubHc  plants  pay  no  taxes,  —  an  item  which  will  be 
at  present  overlooked,  as  their  charges  for  service  must, 


IN  MASSACHUSETTS 


IM 


according  to  law,  be  sufficient  to  cover  the  maturing 
debts  and  the  sinking  fund  payments,  —  and  their  invest- 
ment per  customer  is  far  less. 

Without  attempting  to  make  a  separation  between  the 
street  Hghting  business  and  the  commercial  light  and 
power  business  we  have  found  that  the  total  plant  in- 
vestment per  customer  is  $162  in  the  municipal  plants 
and  $226,  or  40  per  cent  higher,  in  the  companies.  And 
we  have  also  found  that  all  of  this  investment  is  as  well 
accounted  for  in  the  one  case  as  in  the  other.  But,  when 
we  carry  the  analysis  further,  and  separate  the  investment 
in  distributing  system  according  to  the  proportionate  re- 
lations to  the  total  which  the  street  lighting  lines  and  the 
commercial  lines  bear  in  each  group,  it  is  evident  that 
the  fully  justified  investment  per  customer  is  only  $43.50 
in  the  public  plants  and  $80  ($70,  if  the  value  of  under- 
ground construction  be  deducted),  or  84  per  cent  greater, 
in  the  companies.  Also  it  appears,  from  the  study  made 
in  the  preceding  chapter,  that  the  line  investment  has 
been  more  economical  in  the  latter,  since  for  correspond- 
ing equipment  they  have  expended  from  15  to  20  per  cent 
less  than  have  the  municipal  plants.^ 

Though  it  would  be  rather  difficult  to  estimate  what 
portion  of  the  station  investment  should  be  charged  against 
the  street  lighting  business,  yet,  in  the  light  of  the  various 
analyses  which  have  been  made,  it  is  probably  safe  to 
assume  that  the  total  investment  lawfully  created  for  the 
commercial  service,  is  relatively  50  per  cent  higher  in  the 

1  The  investment  in  distribution  system  —  lines,  poles,  meters,  trans- 
formers, and  street  lamps  and  fixtures  —  was,  in  1915,  $2,717,202  for 
the  companies,  and  $1,272,470  for  the  public  plants.  The  ratio  of  com- 
mercial lines  to  total  lines  was,  in  the  former,  about  69  per  cent,  and 
in  the  latter  62  per  cent.  Making  the  division  accordingly,  we  find  that 
the  commercial  line  investment  of  the  comjMinies  is  roughly  $1,874,868, 
while  that  of  the  municipal  plants  is  only  $788,931.  These  figures  are, 
of  course,  only  approximately  correct. 

The  number  of  customers  of  the  companies  was  23,417,  while  that  of 
the  municipal  plants  was  18,069. 


200 


MUNICIPAL  ELECTRIC  LIGHTING 


• 


■ 


companies  than  in  the  municipal  plants.  This  means  that 
the  former  might  be  expected  to  make  their  rates  suffi- 
ciently high  to  provide  for  fixed  charges  proportionately 
50  per  cent  greater  than  those  incmred  by  the  other 
group,  granting  that  they  could  secure  their  capital  at  the 
same  figure  —  as  a  matter  of  fact  they  pay  at  least  1  per 
cent  more.  Now,  without  making  any  allowance  for  div- 
idends on  the  investment,  which  we  will  assume  are  pro- 
vided for  out  of  the  profits  resulting  from  the  larger  busi- 
ness done,  we  find  that  the  aggregate  outlays  of  the  com- 
panies for  taxes,  depreciation,  and  interest,  amount  to 
about  25  per  cent  of  the  total  operating  expenses  (includ- 
ing taxes)  plus  the  interest  and  depreciation  charges. 

Accordingly,  since  the  investment  per  customer  is  50 
per  cent  higher,  and  since  relatively  50  per  cent  more 
must  be  paid  for  the  fixed  charges,  might  we  not,  therefore, 
expect  to  find  rates  about  12  or  13  per  cent  higher  in  the 
companies  than  in  the  municipalities,  since  the  unit  cost 
of  operation  is  about  the  same?  In  other  words,  would 
they  not  be  justified  in  charging  such  prices  as  would  make 
their  total  average  income  from  sales  of  current,  excluding 
street  lighting  and  sales  to  other  companies,  at  least 
0.750  cents  per  kilowatt  hour  higher  than  the  corre- 
sponding income  of  the  pubhc  plants,  which  would  be  equal 
to  6.550,  or  10  per  cent  above  their  present  average  income 
of  5.950  from  this  service?  Or,  if  the  company  rates  as 
they  now  stand  are  equitable,  should  not  the  municipal 
plants  be  furnishing  current  at  about  88  per  cent  of  their 
present  rates,  or  5.100,  which  is  more  than  14  per  cent 
lower  than  the  company  rate? 

Many  objections  can  be  raised  against  this  line  of 
argument,  and  it  may  not  be  a  wholly  accurate  way  of 
stating  the  problem;  yet  the  writer  believes  that,  to  say 
the  least,  he  has  been  suflSciently  conservative  in  these 
calculations. 

But,  returning  to  a  study  of  the  rates  as  they  actually 


IN  MASSACHUSETTS 


201 


are,  we  notice  that  the  commercial  lighting  rate  of  the 
companies  has  been  reduced  twice  as  rapidly  as  that  of 
the  public  plants,  until  now  it  is  a  Httle  less  (10.062)  than 
that  of  the  latter  (10.305),^  in  spite  of  the  fact  that  they 
have  been  much  more  liberal  in  their  policy  of  extending 
service  to  unprofitable  customers,  and  have  pushed  their 
lines  much  farther  in  order  to  get  new  business.^  The 
street  lighting  rates  have  been  reduced  but  slightly  during 
the  period  and  now  stand  about  25  per  cent  below  the  com- 
mercial rates.  All  of  this  business,  however,  is  done  on  the 
contract  basis,  at  a  fixed  charge  per  lamp  per  year,  with 
frequently  more  favorable  rates  for  long-time  contracts. 
The  price  charged  for  current  sold  to  other  companies, 
as  might  be  expected  under  the  circumstances,  is  about  75 
per  cent  higher  in  the  public  plants. 

The  power  rates  have  decreased  much  more  rapidly  in 
the  municipal  plants  than  in  the  companies,  due  to  the 
great  increase  in  this  part  of  their  business.  It  is  rather 
surprising,  however,  to  find  the  rate  for  power  about  one 
sixth  lower  (0.464)  in  the  former  (2.583)  than  m  the  latter 
(3.047).  The  difference  is  mostly  accounted  for  by  the 
municipal  plant  of  Danvers,  which  sells  a  large  quantity 
of  power  current  at  a  rate  of  1.634  per  kilowatt  hour,  lower 
even  than  the  Holyoke  rate.   Evidently,  if  we  may  judge 

1  For  the  municipal  plants  the  sales  to  public  buildings  have  been 
included  with  the  commercial  lighting  though  the  rate  charged  for  this 
service  is  only  8.018.  This  is  necessary  in  order  to  keep  our  data  com- 
parable, even  though,  as  somethnes  it  seems  to  happen,  no  actual 
transfer  of  cash  is  made  by  the  municipality  to  its  lighting  department 

for  this  service.  .        ,        i 

«  It  is  of  some  interest  to  note,  in  this  connection,  that  the  companies 
seem  to  make  the  same  maximum  net  rate  to  all  of  their  customers,  even 
though  they  may  be  in  other  municipalities  than  those  in  which  the  plants 
are  situated.  On  the  other  hand,  the  three  public  plants  which  have 
extended  their  lines  outside  their  own  borders,  charge  the  customers  m 
this  foreign  territory,  respectively,  16.7,  27.2,  and  53.0  per  cent  more 
than  the  usual  rate.  From  this  fact  we  can  infer  what  might  happen 
to  their  average  rates  if  they  served  so  many  different  places  as  do  the 
oompanies. 


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N»     ^    ^     >    ^t- 


MUNICIPAL  ELECTRIC  LIGHTING 


203 


by  the  average  capacity  of  its  connected  motors  (13.23 
K.W.,  or  more  than  100  per  cent  larger  than  the  average 
for  the  group,  and  much  larger  than  the  motors  of  any 
other  plant  in  either  group)  this  plant  has  an  unusually 
favorable  business.  It  must  also  be  recalled  that  the  aver- 
age size  of  connected  motors  (6.47  K.W.)  is  somewhat 
greater  in  the  public  plants  than  in  the  companies  (5.95 
K.W.).  Finally,  in  both  cases  it  will  be  observed  that  the 
average  charge  for  current  supplied  for  power  purposes  is 
much  below  the  average  cost  of  production  of  all  classes 
of  current,  as  revealed  by  the  operating  expenses. 

As  to  the  equitableness  of  the  various  rate  schedules, 
not  much  need  be  said,  as  we  are  not  particularly  con- 
cerned with  individual  cases.  Most  of  the  Hghting  current 
is  sold  at  a  fixed  rate  per  kilowatt  hour,  subject  to  prompt 
payment  discounts.  However,  one  of  the  public  plants 
and  6  of  the  private  plants  give  quantity  discounts  for  his 
service.  Also  6  of  the  former  and  10  of  the  latter  appear 
to  offer  contract  rates,  which  are  too  varied  to  admit  of 
any  classification.  Nor  are  these  schedules,  in  most  cases, 
important,  for  very  little  contract  lighting  business  is  now 
done.  Several  plants  make  special  rates  to  large  consumers, 
to  summer  customers,  or  to  those  who  use  current  for  arc 
lights.  Finally,  every  municipal  plant  except  one  imposes 
a  TTiinimiiTn  monthly  or  yearly  charge  upon  lighting  cus- 
tomers, varying  from  $0.50  to  $1  per  month,  and  all  but 
two  of  the  other  group  report  a  similar  charge,  which  is 
usually  $1  per  month;  in  rare  instances  this  charge  takes 
the  form  of  a  meter  rental.^ 

In  the  accompanying  charts  are  shown  the  differences 
between  the  a/verage  and  maximum  net  rates,  which  result 
from  the  rate  schedule  of  the  two  groups  of  plants.   The 

1  Cf.  Mass.,  1913,  ch.  623.  "No  charge  shall  be  made  by  any  person, 
partnership  or  corporation  furnishing  electricity  for  lighting  purposes 
for  the  use  of  a  meter  during  any  portion  of  twelve  consecutive  months, 
if  the  consumer  during  that  period  uses  electricity  to  the  value  of  nine 
dollars.'* 


fm 


MUNICIPAL  ELECTRIC  LIGHTING 


state  of  affairs  disclosed  is  highly  interesting,  though  not 
to  be  wondered  at.  The  close  correspondence  between  the 
two  in  the  case  of  the  municipal  plants  —  even  in  Holyoke, 
which  has  a  maximum  net  rate  of  6  cents  and  an  average 
of  5.980  —  indicates  that  practically  all  customers  are 
served  alike,  and  that  the  municipaUties  are  not  making 
any  particular  attempt  to  develop  their  lighting  business 
by  the  offer  of  specially  attractive  rates.  There  seems  to 
be  no  tendency  whatever  for  lower  rates  to  be  charged  by 
those  plants  which  have  a  higher  average  consumption  of 
current  per  customer.  That  the  average  rate  is  sometimes 
a  little  higher  than  the  maximum  net,  is  in  the  main  ac- 
counted for  by  the  minimum  charges  and  the  prompt 
payment  discounts  lost. 

The  companies,  on  the  contrary,  have  maximum  net 
rates  which  seem  to  be  for  the  most  part  merely  nominal* 
particularly  in  several  of  the  smaller  plants.  Obviously,  in 
some  cases,  certain  classes  of  customers  gain  enormously 
by  the  special  rates  or  quantity  discounts,  though  these 
usually  become  effective  so  speedily  that  all  customers  are 
benefited  thereby.  The  very  sHght  difference  between  the 
maximum  and  average  rates  in  a  number  of  the  larger 
companies,  may  mean  that  they  are  not  desirous  of  in- 
creasing the  hghting  portion  of  their  business  at  the  pres- 
ent time.  We  also  know  that  they  have  a  large  number 
of  small  customers,  and  that  their  power  business  is  rela- 
tively small.  Our  data  show  that,  in  the  case  of  Gloucester 
and  Quincy,  which  have  unusually  high  rates  in  view  of 
their  large  total  sales,  the  consumption  of  current  per 
customer  is  much  below  the  average  for  the  group.  On 
the  other  hand,  the  plants  showing  the  widest  spread 
between  the  two  rates,  such  as  Lee  and  Vineyard,  sell  a 
relatively  large  amount  of  current  per  lighting  customer. 

In  connection  with  these  rate  schedules,  it  must  be  ob- 
served that  none  of  the  plants  of  either  group  do  any  free 
wiring.    Also,  9  of  the  companies  and  10  of  the  municipal 


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IN  MASSACHUSETTS 


205 


IP! 


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plants  make  no  free  renewals  of  lamps.  But  6  of  the  former 
and  7  of  the  latter  renew  carbons,  while  one  of  the  former 
and  two  of  the  latter  renew  tmigstens  under  certain  condi- 
tions. .         , 

In  the  matter  of  power  rates  the  usual  custom  m  each 
group  is  to  fix  a  certain  minimum  monthly  charge  per 
horse  power  of  connected  load,  usually  $1,  followed  by  a 
charge  per  kilowatt  hour  decreasing  with  the  quantity 
of  current  consumed,  according  to  the  Wright  method. 
A  study  of  the  maximum  and  average  rates  of  the  plants 
in  each  group,  as  revealed  in  the  charts,  indicates  that 
they  have  adopted  similar  methods  of  rate  making,  and 
that  even  in  the  smaller  plants,  the  schedules  are  such 
as  will  benefit  the  average  customer. 

The  average  price  received  per  kilowatt  hour  for  street 
lightmg  shows  a  marked  tendency  to  decrease  as  the  quan- 
tity supplied  increases,  particularly  for  amounts  above 

100,000  hours.  , .  ,     i 

By  reason  of  the  diverse  conditions  under  which  the 
plants  operate,  it  is  probably  futile  to  attempt  any  com- 
parison  of  the  individual  unit  income  of  each  group. 
However,  having  excluded  the  street  lighting  business  in 
order  to  make  the  companies  roughly  comparable  with  the 
municipal  plants,  we  find  that,  for  total  sales  under  800,000 
kilowatt  hours,  the  former  have  a  markedly  smaller  income 
per  kilowatt  hour  than  the  latter.  Yet,  above  this  point,  the 
average  rate  is  considerably  higher  in  several  of  the  com- 
panics  than  in  the  corresponding  public  plants.  The  three 
plants  which  practicaUy  account  for  this  difference  are 
Beverly,  Gloucester,  and  Quincy,  each  of  which  has  either 
a  very  high  investment  per  customer,  high  operating  ex- 
penses, due  to  the  character  of  the  business  done,  or  both. 
For  the  most  part,  also,  they  do  a  lighting  rather  than  a 
power  business,  and  in  the  quantity  of  current  delivered 
per  customer  they  stand  at  the  bottom  of  the  entire  group 
of  companies.  Were  it  not  for  these  exceptional  cases,  the 


i 


206 


MUNICIPAL  ELECTRIC  LIGHTING 


curve  of  the  private  plants  would  almost  always  run  below 
that  of  the  other  group,  and  in  only  a  few  instances  slightly 
above  it. 

Table  29  (p.  202)  shows  that  the  rate  of  increase  in 
operating  income  has  been  about  equal  in  the  two  groups 
since  1910,  whether  or  not  the  street  lighting  income  be 
included  in  the  case  of  the  companies.  The  growth  in  net 
income  has  also  been  approximately  the  same,  if  street 
lighting  be  included.  The  gross  income  of  the  companies 
exceeds  that  erf  the  other  group  by  110.9  per  cent,  and 
their  actual  sale  of  current  —  as  distinguished  from  cur- 
rent "delivered"  in  the  public  plants — was  114.6  per  cent 
greater.  But  their  gross  income,  excluding  street  hghting, 
as  we  must  do  for  comparative  piu^wses,  was  only  71.6 
per  cent  larger  than  that  of  the  municipal  plants,  while 
the  quantity  of  current  sold  for  commercial  purposes  was 
84  per  cent  greater.  Finally,  the  total  operating  expenses 
of  the  private  plants  were  only  55.1  per  cent  above  those 
of  the  other  group. 

Again,  the  net  income  of  the  private  plants,  including 
street  lighting,  is  about  five  times  as  great  as  that  of  the 
municipal  plants,  or,  excluding  the  street  lighting  income, 
two  and  one  half  times  as  great.  The  comparative  net 
income  per  kilowatt  hour  sold  for  all  conmiercial  purposes 
is  0.957  in  the  latter,  and  1.332,  or  35.2  per  cent  more,  in 
the  former.^ 

At  first  it  may  appear  that  the  absolute  financial  ad- 
vantage, which,  from  these  analyses,  the  companies  appear 
to  have,  is  due  solely  to  the  greater  amount  of  current 
which  they  sell.   However,  an  examination  of  the  relation 

*  Two  of  the  municipal  plants,  Hull  and  Wakefield,  were  subject  to 
an  actual  loss  in  operation  of  about  $3,500.  None  of  the  companies 
was  operated  at  a  deficit;  but  if  the  street  lighting  income  be  deducted 
in  each  case,  so  that  we  can  have  a  basis  for  comparison  with  the  mu- 
nicipal plants,  it  appears  that  three  plants.  Buzzard's  Bay,  Citizens',  and 
Vineyard,  would  have  suffered  a  deficit  amounting  in  the  aggregate  to 
about  $7,000.  -       \ 


^  i  i  i  li  i  ^  i  4  *?  ^  *»•  ''l  'I  '^.  ^-  i  i  '^  ^ 


^  ^  ^  ^ 


IN  MASSACHUSETTS 


207 


which  the  operating  expenses  bear  to  the  operating  in- 
come, discloses  the  fact  that  there  is  greater  operating 
efficiency  in  the  former,  and  that  their  improvement  has 
been  more  rapid.  At  the  present  time  the  operating  ratio 
of  the  companies,  omitting  the  street  lighting  income  for 
the  sake  of  comparison,  is  75,  while  that  of  the  public 
plants  is  83.7,  or  relatively  11.6  per  cent  higher.  This 
ratio  has  been  reduced  during  the  five-year  period  9.5 
per  cent  by  the  former,  and  only  2.3  per  cent  by  the  latter, 
though  the  companies  at  the  earlier  date  had  only  a  slight 
advantage  in  this  regard.  Nor  do  these  computations 
make  any  allowance  for  the  fact  that  taxes  and  other 
charges  not  incurred  by  the  municipal  plants  are  paid  by 
the  private  plants.  To  this  aspect  of  the  matter,  reference 
will  shortly  be  made. 

Table  SO.  Percentage  Analysis  of  the  Vabious 
Classes  of  Income 


1910 

1916 

CZoMqfmooim 

Mtatici' 
jmUtiet 

Companiet 

Munici- 
palitiet 

Companie$ 
CompanUa  (street  ligH' 
ing  out) 

Commercial  lighting. . . 
Power 

78.1 
..18.5 

54.3 

20.3 

20.6 

4.1 

0.8 

72.0 
25.3 

•  •  • 

0.9 
1.8 

53.1 

22.4 

18.7 

6.2 

0.6 

65.3 
27.5 

Street  lighting 

Other  companies 

Other  sources 

•  •  • 

0.6 

2.8 

•  •  • 

6.4 
0.8 

So  far  as  the  percentage  distribution  of  the  income  be- 
tween the  various  classes  of  business  is  concerned,  when 
the  street-lighting  income  of  the  companies  is  deducted,  we 
find  that  there  is  little  to  choose  between  the  two  groups, 
except  in  the  matter  of  sales  to  other  companies.^   It  will 

1  Though  the  public  plants  of  Holyoke  and  Mansfield  sell  to  the  local 
authorities  the  current  used  for  street  lighting,  and  make  a  corresponding 
entry  in  the  income  account,  just  as  if  they  were  private  concerns,  this 
"mcome"  is  naturally  not  mcluded,  since  the  averages  would  thereby 
be  distorted. 


if 

i 


MUNICIPAL  ELECTRIC  LIGHTING 

also  be  observed  that  the  income  from  "other  sources*' 
is  proportionately  higher  in  the  municipal  plants. 

Before  leaving  the  subject  of  the  income,  it  is  instruc- 
tive to  make  a  few  more  analyses.  In  the  first  place,  while 
the  investment  per  dollar  of  operating  income,  excluding 
street  lighting,  has  decreased  from  $5.27  to  $4.35,  or  17.5 
per  cent  for  the  municipal  plants,  it  has  increased  from 
$4.20  to  $4.80,  or  9.5  per  cent  for  the  companies.  In  other 
words,  the  comparable  income  per  dollar  of  investment  is 
in  the  former  23  cents  and  in  the  latter  21.7  per  cent.  The 
difference,  to  be  sure,  is  slight;  but  the  tendency  indicated 
during  the  past  five  years  is  sufficiently  obvious.  In  the 
light  of  oiur  previous  analyses,  this  increasing  investment 
is  justified;  though,  as  has  already  been  suggested,  it  does 
not  appear  that  the  companies  are  taking  advantage  of  this 
fact  so  far  as  their  rate  policy  is  concerned,  notwithstanding 
their  fixed  charges  are  proportionately  increased. 

While  the  total  income  per  customer  from  light  and 
power  sales  has  decreased  more  rapidly  (25.7  per  cent)  in 
the  companies  than  in  the  public  plants  (19.8  per  cent),  — • 
the  absolute  figures  are  still  about  25  per  cent  higher  in  the 
former  ($45.75)  than  in  the  latter  ($36.19),  —  both  in  light 
and  power  income  they  are  in  the  lead.  The  per  capita  in- 
come also,  when  the  street  lighting  income  of  the  companies 
is  deducted,  is  25  per  cent  greater  in  the  one  group  ($4.03) 
than  in  the  other  ($3.26).  A  like  rate  of  increase  in  this 
item  is  to  be  found  in  both  cases  (32  per  cent).  Finally, 
the  increase  in  the  street  Hghting  income  per  capita  is 
due  to  a  longer  hours'  use  of  lamps  per  night,  rather  than 
to  an  increase  in  the  connected  load.' 

The  average  income  per  kilowatt  connected  load,  exclud- 
ing street  hghting  and  sales  to  other  companies,  is,  for  the 
9  municipal  plants  fm-nishing  the  complete  data,  $26.41, 
and  for  the  companies  $28.20,  and  the  rate  of  decrease 
since  1910  has  been  more  rapid  for  the  latter.  These  figures 

»  Appendix,  pp.  410-413.  41&-417. 


IN  MASSACHUSETTS 


209 


are  surprisingly  close  together.  Taken  separately,  we  find 
the  income  per  connected  commercial  lighting  load  to  be 
almost  identical  in  the  two  groups;  but  the  public  plants 
have  had  an  actual  increase  in  this  item  (1.8  per  cent) 
during  the  period,  while  the  companies  have  been  subject 
to  a  decrease  of  18.6  per  cent.  This  fact  serves  to  prove 
our  earUer  conclusions  to  the  effect  that  the  latter  are 
rapidly  extending  their  service  to  the  less  profitable  cus- 
tomers, while  the  former  are  avoiding  the  unattractive 
business.  In  this  connection  it  must  also  be  remembered 
that  the  consumption  of  current  per  kilowatt  connected 
lighting  load  has  increased  10  per  cent  for  the  public  plants 
and  has  decreased  5.6  per  cent  for  the  private  plants. 

It  is  instructive  to  note  that  the  rate  of  decrease  in  in- 
come per  connected  power  load  has  been  twice  as  great  in 
the  municipal  plants  (38.7  per  cent)  as  in  the  other  group 
(18.6  per  cent).  This  is  accounted  for  largely  by  the  great 
reduction  in  the  power  rates  of  the  municipal  plants. 

The  income  per  kilowatt  capacity  of  dynamos  (street 
lighting  excluded)  has  remained  practically  unchanged 
throughout  the  period,  but  is  absolutely  aUbut  25  per  cent 
higher  for  the  companies.  This  condition  is  due  in  large 
measure  to  their  better  load  factor  and  better  diversity 
factor,  as  well  as  to  the  fact  that  their  dynamo  capacity,  in 
proportion  to  the  amount  of  business  done,  is  somewhat  less.* 

SXTM&IABT 

From  this  chapter  the  following  facts  stand  out  prom- 
inently. 

1.  If  municipal  plants  abide  by  the  law,  which  forbids 

^  Attention  should  be  called  to  the  fact  that,  while  the  income  of  the 
companies,  excluding  the  street  lighting  income,  is  25  per  cent  higher  than 
that  of  the  municipal  plants,  whether  per  customer,  per  capitOj  or  per 
kilowatt  capacity,  the  income  per  kilowatt  connected  load  is  only  7  per 
cent  greater.  Tliis,  again,  indicates  that  they  have  made  provision  for 
a  large  proportion  of  customers  with  bad  load  factors,  thereby,  perhaps, 
improving  their  diversity  factor. 


» 


«10 


MUNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


211 


them  to  sell  current  below  cost,  —  cost  being  broadly 
defined  as  including  not  only  operating  expenses  but  also 
charges  for  interest,  depreciation,  and  matiuing  debt,  — 
they  cannot  possibly  lose  money  in  operation.  In  1915 
only  two  of  these  plants,  Hull  and  Wakefield,  showed  an 
operating  deficit. 

2.  In  1910  the  average  unit  cost  of  the  companies  was 
conspicuously  lower  than  that  of  the  other  group. 

S.  Between  1910  and  1915  the  public  plants  reduced 
their  unit  costs  much  more  rapidly  than  did  the  private 
plants. 

4.  At  the  present  time,  when  the  total  unit  costs  of  the 
companies  are  put  on  a  comparable  basis,  they  still  have  a 
considerable  advantage  over  the  municipal  plants,  a  part 
of  which  is  probably  due  to  their  greater  output. 

5.  The  companies  have  a  very  noticeable  advantage  over 
the  other  group  so  far  as  the  unit  cost  for  "manufacturing *' 
is  concerned. 

6.  The  average  income  from  all  sales  of  current  per  kilo- 
watt hour  is  almost  identical  in  the  two  groups,  with  a 
slight  advantage  for  the  companies,  except  in  the  matter 
of  power  sales,  in  which  the  unit  income  is  somewhat  lower 
for  the  public  plants,  due  to  one  or  two  exceptional  cases. 

7.  The  much  more  marked  rate  of  decrease  in  the  unit 
income  of  the  municip>al  plants  has  been  occasioned  by 
the  rapid  growth  of  their  power  business. 

8.  Because  of  the  far  greater  investment  per  customer 
in  the  companies,  we  might  logically  have  expected  con- 
siderably higher  rates  than  we  do  find,  or,  on  the  other 
hand,  we  might  have  looked  for  proportionately  lower 
rates  in  the  pubHc  plants. 

9.  While  the  maximum  net  lighting  rates  appearing  in 
the  companies'  schedules  average  higher  than  those  of  the 
municipal  plants,  these  rates  are  rarely  effective,  because 
of  the  hberal  application  of  the  quantity  discount  policy. 
Hence  even  the  small  consumers  rarely  pay  more  than 


would  be  charged  by  the  municipal  plants,  in  which  the 
maximum  net  rate  is  almost  without  exception  also  the 
minimum  rate. 

10.  Though  the  mxxximum  net  'power  rates  of  the  com- 
panies are  in  the  main  higher,  in  this  case  also  the  quan- 
tity discounts  take  effect  early,  so  that,  again,  the  position 
of  the  smaller  customers  is  about  the  same  as  in  the  public 

plants. 

11.  The  operating  ratio  of  the  companies  is  considerably 
better  than  that  of  the  public  plants,  the  latter  having 
shown  Httle  improvement  in  this  regard  since  1910. 

12.  Holyoke,  as  might  be  expected,  shows  a  much  lower 
unit  cost  (1.592)  than  that  found  in  any  of  the  other 
plants.  This  advantage  in  operation,  however,  is  largely 
the  result  of  abnormally  low  distribution  expenses  (0.266) 
due  to  the  small  length  of  lines,  rather  than  to  economies 
in  generation,  in  spite  of  the  use  of  some  water  power. 
The  unit  income  (2.831)  is  not  much  lower  than  one  would 
reasonably  expect,  in  view  of  the  nature  of  this  plant's 
territory  and  business. 


CHAPTER  Vn 


fM 


FINANCIAL  STATISTICS  OF  GENERATING  PLANTS 

(concluded) 

1.  Disposal  op  Net  Income  * 

We  are  at  length  in  a  position  to  make  some  examination 
of  the  financial  results  of  operation  in  the  two  groups  of 
plants,  as  shown  by  the  disposal  of  their  net  income. 
Adding  to  the  net  a  few  practically  negligible  profit  and 
loss  items  of  income,  derived  for  the  most  part  from  "job- 
bing," interest  on  deposits,  and  the  rent  of  fixtures,  we  find 
the  total  to  be  $566,521  for  the  companies  and  $112,075 
for  the  municipal  plants,  against  which  charges  are  made 
as  indicated  in  Table  31. 

It  is  interesting  to  observe  that,  while  the  companies 
have  financed  themselves  to  the  extent  of  a  little  more  than 
three  fifths  of  their  investment  by  means  of  stock  issues, 
yet  their  total  interest  payment  on  notes  and  bonds  is 
almost  50  per  cent  greater  than  that  of  the  public  plants. 
The  actual  amount  of  interest  paid  per  kilowatt  hour 
delivered  is  almost  the  same  in  the  two  groups,  0.414 
cents  in  the  latter  and  0.369  in  the  former,  in  spite  of 
the  fact  that  the  municipal  plants  must  secure  their  cap- 
ital wholly  by  borrowing,  unless  they  call  on  the  tax  levy.* 
It  is  to  be  remembered,  however,  that  the  private  plants 

*  Appendix,  pp.  454-457. 

*  In  1915,  this  group  of  municipal  plants  (Holyoke  excluded),  had 
outstanding  $1,283,010  in  bonds  and  $278,210  in  notes,  a  total  of 
$1,561,220,  or  53.4  per  cent  of  the  total  investment  ($2,923,825).  The 
remainder  of  the  expenditures  on  capital  account  have  been  secured  from 
the  tax  levy,  either  through  "appropriations  for  construction,"  "appro- 
priations for  bond  and  note  payments,"  or  "appropriations  to  the  sinkng 
fund."  The  sum  total  of  payments  to  these  accounts  out  of  earnings  is 
exceedingly  small. 


MUNICIPAL  ELECTRIC  LIGHTING 


213 


Table  31.  Percentage  Analysis  op  Chabges  against 

Income 


Companies 

MunidpdiHe*  * 

Holyoke 

Itan 

Amount 

Percent 
qfiotal 

Amount 

Percent 
qftotal 

Per  cent 
cftotal 

Operating  income 

Other    income    (pro- 
fit and  loss  items) . . 

$1,417,235 

22,222 

•  •    • 

•  •    • 

$671,761 
2,957 

•  •    • 

•  •    • 

•  •    • 

•  •    • 

Total 

$1,439,457 
566,521 

872,935 
90,094 
56,314 

353,870 

•  •  • 

23,415 

•  •    • 

•  •    • 

62.5 
6.4 
4.1 

25.4 

•  •  • 

•  •  • 

1.6 

$674,718 
112,075 

562,643 
62,143 
92,306 

■  •  • 

24,596 

55,797 
8,096 

•  •    • 

•  •    • 

70.0 

7.7 

11.4 

•  •  • 

3.0 

6.9 
1.0 

Total    available 
("net") 

Charges  against  income: 
Operating  expenses. . . 
Interest 

■    •  • 

67.3 
7.6 

Depreciation 

Dividends 

15.7 

Sinking    fund    pay- 
ments   

Note  and  Bond  pay- 
ments   

9.2 

All  other  charges 

0.2 

Total 

$1,396,628 
42,829 

100. 

•  •  • 

$805,581 
130,863 
(deficit) 

100. 

•  •  • 

100. 

Balance 

}  Holyoke  omitted. 

pay  from  1  to  1.5  per  cent  more  for  their  borrowed  capi- 
tal than  do  the  public  plants,  which  have  the  entire  assets 
of  their  municipalities  to  offer  as  security.  The  one  group 
pays  an  average  rate  of  not  more  than  4  per  cent,  while 
the  other  pays  from  5  to  5.5  per  cent,  and  sometimes 
higher.i 

The  unit  charges  for  depreciation,  as  a  result  of  the 
statutory  provisions,  are  much  higher  (0.615  cents),  in  the 
municipal  plants  than  in  the  companies  (0.SS4  cents),  in 

*  This  was  true  for  conditions  as  they  were  prior  to  1915.  During  the 
present  abnormal  times  the  rates  for  new  loans  run  much  higher  in  both 
groups. 


£14 


MUNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


215 


which  they  constitute  only  4.2  per  cent  of  all  charges 
against  net  income.  More  detailed  attention  will  in  a 
moment  be  given  to  this  particular  item. 

As  would  be  expected,  the  larger  share  of  the  net  in- 
come of  the  companies  goes  to  the  stockholders.  The 
total  amount  of  dividend  payments  during  the  year  was 
$353,870,  or  25.4  per  cent  of  all  charges  against  income. 
Three  of  the  smaller  companies,  to  be  sure,  paid  no  divi- 
dends,^ but  the  remaining  14  paid  at  rates  ranging  from 
5  to  32  per  cent.  The  average  rate  was  11.94  on  the  out- 
standing stock  of  all  the  companies  (10.8  if  premiums  be 
included),  or  6.66  on  the  entire  investment.  Apparently 
there  could,  in  some  instances,  be  an  appreciable  lowering 
of  the  rates  without  doing  any  injustice  to  the  stock- 
holders, though  it  must  not  be  forgotten  that  frequently 
present  high  returns  merely  compensate  for  earlier  low 
returns  or  the  failure  to  earn  any  dividends  whatever. 

The  miscellaneous  charges  against  income  appearing  in 
the  profit  and  loss  accounts,  are  too  small  to  deserve  atten- 
tion. The  sinking  fund  and  maturing  debt  payments  of 
the  public  plants,  however,  —  which,  by  the  way,  do 
not  theoretically  belong  here,  —  are  a  considerable  item, 
amounting  in  the  former  case  to  0.164  cents  per  kilowatt 
hour  delivered,  and  in  the  latter  to  0.372.  Together  they 
amount  to  $80,393,  or  9.9  per  cent  of  all  charges  against 
income,  if  we  consider  that  they  should  be  counted  in  this 
connection.  After  all  payments  have  been  deducted,  the 
companies  show  an  operating  balance  for  the  year  of 
$43,929,  while  the  municipal  plants  are  subject  to  a  deficit 
of  $50,415,  or  $130,809  if  the  charges  just  mentioned  are 
included. 

Now,  before  discussing  these  charges  which  are  in  them- 
selves of  no  great  significance  for  our  comparative  study, 
let  us  make  a  more  careful  study  of  the  amount  charged 
off  for  depreciation  by  each  group  of  plants,  for  this  is  one 
*  Buzzard's  Bay,  Citizens',  and  Vineyard. 


of  the  vital  issues  which  confront  us  in  an  investigation  of 
this  kind. 

Accordingly,  we  must  note  first  that  during  the  year 
1914-15,  7  of  the  17  companies  made  no  allowance  what- 
ever for  depreciation.  During  the  five-year  period  there 
are  3  plants  which  have  never  credited  anything  to  this 
account,^  and  there  are  only  6  which  have  regularly  writ- 
ten off  their  depreciation  each  year.*  Of  the  individual 
plants,  2  charged  off  more  than  in  the  preceding  year,  and 
6  made  a  less  allowance.  Also,  2  which  in  the  preceding 
year  charged  off  depreciation  failed  to  do  so  in  1914-15, 
while  2  others  which  had  not  done  so  at  the  earlier  date 
made  a  slight  allowance  this  year.  From  these  data  it 
should  be  sufficiently  apparent  that  the  rate  of  deprecia- 
tion provided  for  by  the  separate  companies  which  actually 
write  off  depreciation,  is  considerably  higher  than  the 
average  for  the  group.  This  rate  we  find  for  1914-15  to 
be  1.64  per  cent  of  the  total  investment  of  the  plants 
reporting  this  item,  or  50  per  cent  higher  than  the  average 
rate  for  the  entire  group.* 

Bearing  these  considerations  in  mind,  we  must  attempt 
to  discover  the  significance  of  the  fact  that  the  deprecia- 
tion charges  of  the  public  plants  are  150  per  cent  higher 
per  kilowatt  hour  delivered  than  those  of  the  private 
plants,  or,  computed  as  a  portion  of  the  total  investment, 
why  the  ratio  thus  expended  by  the  former  (3.16  per  cent) 
was  200  per  cent  greater  than  that  of  the  latter  (1.10  per 
cent).  This  marked  lack  of  correspondence  might  be 
accounted  for  in  several  ways: 

1  Buzzard's  Bay,  Newburyport,  and  Vineyard. 

*  The  number  of  plants  making  allowance  for  depredation  during  the 
series  of  years,  1910-15  inclusive,  was,  respectively,  l!l,  9, 13, 11, 10, 10. 
The  average  number  thus  appears  to  be  10.7  per  year,  or  about  two  thirds 
of  the  total  number. 

'  The  plants  not  writing  of  depreciation  during  this  year  were  Buz- 
zard's Bay,  Newburyport,  Plymouth,  Vineyard,  Weymouth,  and  Winch- 
endon.  The  total  investment  of  this  group  was  $1,730,094,  or  about  one 
third  of  the  total  investment  of  all  of  the  companies  studied., 


216 


MUNICIPAL  ELECTRIC  LIGHTING 


1.  The  legal  amount  written  off  annually  by  the  muni- 
cipal plants  may  be  somewhat  higher  than  is  necessary 
in  order  to  meet  the  depreciation  as  it  occurs.  Some  sup- 
port for  this  view  is  found  in  the  fact  that  they  now  have 
depreciation  funds  carried  as  assets,  amounting  in  the  ag- 
gregate to  $96,728,  or  3.3  per  cent  of  the  total  mvestment 
of  the  17  plants,  and  that  the  net  addition  to  these  funds 
during  the  year  1914-15  amounted  to  $16,641,  between 
one  fifth  and  one  sixth  of  the  total  depreciation  allowance, 
equivalent  to  0.111  cents  per  kilowatt  hour  deUvered,  or 
0.57  per  cent  of  the  entire  investment.  But  this  explana- 
tion does  not  throw  much  light  on  the  problem  when  we 
find  that  in  two  or  three  instances  the  companies  also  have 
created  little  depreciation  or  reserve  funds,  which,  how- 
ever, they  customarily  carry  as  a  liability,  and  for  which 
they  make  no  separate  return,  so  that  in  all  probabiUty  the 
sums  so  designated  have  simply  been  spread  over  various 
portions  of  the  assets.^ 

2.  From  another  angle  it  may  be  argued  that  the  public 
plants  have  used  a  portion  of  their  depreciation  for  addi- 
tions to  plant  instead  of  for  renewals,  while  the  companies, 
on  the  other  hand,  have  charged  off  only  enough  to  meet 
the  necessary  renewals.  And,  as  a  matter  of  fact,  the 
municipal  plant  returns  indicate  that  about  $20,000  has 
been  put  into  new  construction  during  the  year,  though 
the  records  are  kept  in  such  a  way  that  it  is  frequently 
very  diflScult  to  differentiate  additions  and  extensions  from 
renewals.  But  if  we  assume  that  our  figures  are  correct, 
together  with  the  amount  added  to  depreciation  funds,  we 
could  thus  account  for  at  least  two  fifths  of  the  total  de- 
preciation written  off  by  the  municipal  plants  as  used  for 
purposes  other  than  current  renewals. 

From  a  careful  study  of  the  returns  it  does  not  defin- 
itely appear  that  more  than  $40,000  of  the  total  depreci- 

*  In  two  or  three  instances  small  earning  investments  have  been  created 
at  one  time  and  another.  These,  however,  scarcely  merit  attention. 


IN  MASSACHUSETTS 


217 


ation  was  used  for  renewals.  This  would  be  equal  to  0.267 
cents  per  kilowatt  hour  delivered,  and  1.4  per  cent  of  the 
total  investment,  or  in  reality  only  slightly  higher  rela- 
tively than  the  amount  written  off  by  the  companies.* 
It  is  rather  difficult  to  say  exactly  where  the  remaining 
$10,000  to  $15,000  of  their  depreciation  went.  Some  of  it 
was  used  for  extensions,  some  for  renewals,  no  doubt,  and 
some  was  even  transferred  to  the  operating  accounts  for 
current  repairs  and  there  debited.  Also,  it  is  very  certain 
that,  in  view  of  the  comparatively  small  amount  charged 
off,  the  entire  depreciation  allowance  made  by  the  com- 
panies was  not  more  than  sufficient  to  cover  renewals  and 
extraordinary  repairs  —  indeed,  it  would  scarcely  seem 
to  be  enough  for  this  purpose. 

Here,  then,  we  have  pretty  good  evidence  that  the 
actual  provisions  for  present  depreciation  may  not  have 
been  particularly  different  in  the  two  groups  after  all. 
And  we  know  conclusively  that  the  companies  are  dis- 
posed to  provide  for  their  depreciation  either  when  it  is 
most  necessary  or  when  it  suits  their  convenience,  rather 
than  according  to  any  fixed  policy. 

3.  Again,  there  is  the  possibility  that  the  companies  are 
more  skillfully  managed  than  the  public  plants,  and  that 
their  equipment  is  newer  and  their  construction  and  engin- 
eering better,  so  that  the  element  of  depreciation  has  been 
reduced  to  a  minimum.  Hence  their  charges  under  this 
head  would  be  correspondingly  low.  There  is  no  doubt  a 
good  deal  of  truth  in  this  argument,  when  we  remember 
that  their  station  units  are  considerably  newer  (7.6  years 
as  opposed  to  9.1  years),  that  they  use  comparatively  few 
foreign  poles,  and  so  would  have  less  trouble  with  their 
lines,  and  that  nearly  half  of  their  distribution  system  has 
been  installed  since  1910.  Local  conditions  may  also  affect 
the  problem,  as  well  as  the  fact  that  there  is  a  certain 

'  The  rate  is  a  little  less  than  that  of  the  companies  actually  reporting 
depreciation  allowances  (1.64  per  cent). 


818 


MUNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


219 


W 


amount  of  underground  construction  in  the  companies.  It 
is  also  probable  that  in  the  case  of  many  of  the  plants  the 
personal  factor  is  important;  but  we  are  not  now  in  a 
position  to  state  definitely  just  what  weight  should  be 
attached  to  this  element. 

4.  Furthermore,  it  may  be  suggested  that  the  compan- 
ies are  providing  for  their  depreciation  in  the  operating 
accoimts;  that  they  have  adopted  the  "one  hundred  per 
cent  eflSciency  **  slogan  of  the  "  boys  "  who  are  in  the  electric 
light  and  power  business,  as  represented  by  the  National 
Electric  Light  Association.  While  they  do  not  call  deprecia- 
tion by  that  name,  they  may  provide  for  it  all  the  same  in 
their  current  repairs. 

But  if  this  were  the  case,  we  would  expect,  other  things 
being  equal,  to  find  a  comparatively  high  unit  cost  for 
repairs  of  central  plant  and  lines.  In  this,  however,  we 
are  somewhat  disappointed,  for  it  appears  that  the  total 
expended  for  repairs  and  renewals  appearing  in  the  oper- 
ating accounts,  was  relatively  lower  per  kilowatt  hour 
dehvered  for  the  companies  (0.S80  cents)  than  for  the 
municipal  plants  (0.519  cents).  In  relation  to  the  total 
investment  in  both  groups,  the  amoimts  thus  expended 
were  respectively  1.83  and  2.78  per  cent.^  Of  course, 
some  of  the  preceding  considerations  regarding  more  care- 
ful management  and  more  modern  equipment,  apply  here 
as  well;  yet  this  argument  is  not  sufficiently  conclusive. 

5,  Finally,  there  is  the  possibility,  in  fact  a  strong 

^  In  making  this  computation  the  writer  has  attempted  to  separate 
out  the  expenditures  strictly  for  repairs  from  the  other  items  in  the  dis- 
tribution expenses.  Consequently,  only  the  entry  "repair  of  lines,  arc 
lamps,  and  meters"  was  taken  for  the  public  plants,  and  the  items, 
"repairs  and  renewals  of  lines  and  conduits"  and  "repairs  and  renewals 
of  meters  and  transformers,"  for  the  companies.  The  amount  accredited 
to  the  former  under  this  head  wiU  be  relatively  too  high,  because  it  in- 
cludes arc  lamp  repairs.  If  all  of  the  items  under  distribution  expenses 
which  relate  in  any  way  to  repairs  be  included,  the  ratios  are  increased 
to  2.4  per  cent  and  S.4  per  cent,  respectively,  while  the  difference  be- 
tween the  two  remains  practically  unchanged. 


probability,  even  granting  that  there  may  be  some  truth 
in  all  of  these  arguments,  that  the  year  1914-15  was  not 
a  typical  year  so  far  as  the  industry  was  concerned. 
Chance  may  have  played  some  part;  but  we  know  further 
that  the  market  conditions  were  abnormal  and  that  the 
price  of  material  became  ahnost  prohibitively  high.  Under 
these  circumstances,  might  we  not  logically  expect  that 
the  companies,  which  are  bound  by  no  legal  restrictions 
in  the  matter,  would  put  off  until  better  days  a  good  many 
of  the  customary  renewals,  and  consequently  write  off 
a  correspondingly  smaller  amount  of  depreciation?  Might 
they  not  also  be  induced  by  the  desire  to  pay  the  custom- 
ary dividends,  to  postpone  repairs  wherever  possible, 
whereas  the  public  plants  would  be  subject  to  no  such 

influence? 

The  writer  has  satisfied  himself  on  this  point  by  making 
a  careful  study  of  all  of  the  returns  of  each  plant  for  the 
years  1910  to  1915  mclusive.  The  results  of  the  compu- 
tations made  appear  in  the  accompanying  table  (Table  32) 
which  presents  some  unusually  significant  data. 

In  the  first  place,  it  is  evident  that  the  companies,  as 
is  frequently  asserted,  have  provided  for  their  deprecia- 
tion as  it  has  occurred,  and  that  the  average  yearly  rate 
has  been  even  a  little  higher  than  that  of  the  municipal 
plants,  though  there  have  been  wide  fluctuations  from 
year  to  year.  If  the  investment  in  real  estate  were  de- 
ducted in  both  groups,  since  so  large  a  number  of  the  public 
plants  either  do  not  value  their  land  at  all  or  value  it  low, 
the  difference  in  favor  of  the  companies  would  be  even 

more  marked. 

In  the  expenditure  for  repairs,  the  public  plants  have 
maintained  a  remarkable  uniformity,  as  have  also  the 
companies,  if  the  last  year  be  omitted.  In  the  case  of  the 
latter,  the  rate  of  depreciation  charged  off  each  year  does 
not  seem  to  have  had  any  noticeable  effect  upon  the  ratio 
expended  for  repairs,  except  that  in  the  year  when  the 


MUNICIPAL  ELECTRIC  LIGHTING 


221 


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depreciation  was  highest,  the  amount  expended  for  repairs 
was  also  highest,  and  in  the  two  years,  when  the  former 
was  lowest  the  latter  was,  strange  to  say,  also  lowest. 
That  these  expenditures  are  proportionately  somewhat 
less  (25  per  cent)  in  the  companies,  is  largely  aecounted 
for  by  the  fact  that  they  have  been  making  extensions  and 
improvements  of  all  kinds  apparently  much  more  rapidly 
than  have  the  municipal  plants  — a  condition  clearly 
shown  by  the  table  of  investments  for  each  year.  The 
reasons  above  given  are  also  of  considerable  significance.* 

Since  the  two  years  of  most  rapid  growth  in  investment 
are  the  years  of  most  noticeable  decrease  in  the  amount 
of  depreciation  charged  off,  there  might  seem  to  be  some 
ground  for  the  assertion  that  the  companies  have  been 
charging  to  capital  account  the  depreciation  which  should 
be  met  out  of  earnings.  But  under  these  circumstances  we 
would  hardly  expect  a  concomitant  decrease  in  the  pro- 
portionate amount  expended  for  repairs  in  the  operating 
account.  Furthermore,  as  it  appears  from  our  earlier 
analyses,  they  have  more  tangible,  serviceable  property  as 
a  result  of  their  capital  outlays  than  have  the  municipal 
plants.  Also  the  reasons  for  the  decreased  expenditure 
for  repairs  have  probably  been  sufficiently  accounted  for. 
Hence  this  particular  objection  does  not  seem  to  be  valid. 

Again,  an  examination  of  the  table  shows  that  in  the 
years  of  least  increase  in  investment,  the  amount  of  depre- 
ciation charged  off  was  highest.  This  fact  clearly  indicates 
that  the  private  plants  have  not  been  deferring  their 
depreciation.    It  may,  however,  be  asserted  with  some 

1  It  must  also  be  remembered  that  the  repair  figures  for  the  cwmpaniea 
in  1914-15  are  disproportionately  low  when  compared  with  the  figures  for 
the  other  group,  because  they  do  not  include  maintenance  and  renewals 
of  are  lamps  as  is  the  case  in  the  public  plants.  Also,  in  a  numbCT  of 
cases  the  wages  of  linemen  have  been  included  with  the  general  distribu- 
tion wages  instead  of  with  the  items  for  repairs  and  renewals,  as  in  the 
municipal  plants.  For  this  reason,  again,  the  figures  will  be  somewhat 
too  low. 


I 


222 


MUNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


22S 


assurance  that  in  the  years  of  most  rapid  expansion  the 
line  between  renewals  and  actual  additions  or  extensions 
has  not  been  clearly  drawn.  And,  indeed,  few  of  the  plants, 
either  private  or  public,  appear  to  make  any  careful  distinc- 
tion on  this  point,  so  far  as  one  can  gather  from  the  returns 
submitted  to  the  Board.  In  this  connection  it  is  significant 
to  remember  that  the  municipal  plants  themselves  did  not 
in  the  last  year  actually  expend  for  renewals  more  than 
one  half  of  the  depreciation  which  was  appropriated  by 
the  local  authorities,  or  1.5  per  cent  on  the  total  invest- 
ment. 

The  writer's  conclusions  are,  that,  while  there  may  have 
been  one  or  two  doubtful  cases,  and  while  the  marked  drop 
in  the  rate  of  depreciation  charged  off  by  the  companies 
in  1914-15  may  have  been  in  considerable  measure  the 
result  of  abnonnal  market  conditions,  yet  the  smaller  rate 
usually  written  off  during  the  years  of  heaviest  invest- 
ment is  sufficiently  accounted  for  by  the  fact  that  the 
great  increase  in  new  assets  and  legitimate  improvements, 
has  naturally  made  the  proportionate  amount  of  annual 
depreciation  less.    Past  history  indicates  that,  with  a  few 
exceptions,  they  are  being  properly  financed  in  this  regard. 
Though  several  of  the  least  efficient  plants,  which  are  usu- 
ally unable  to  pay  dividends,  have  been  negligent  in  the 
matter,  the  remainder  make  an  unusually  good  showing 
for  the  group,  as  compared  with  the  municipal  plants, 
when  we  remember  that  on  the  average  not  more  than  two 
thirds  (10.7)  of  the  entire  number  have  charged  off  depre- 
ciation each  year.    The  average  rate  of  depreciation  for 
those  actually  making  the  allowance  is  considerably  higher 
than  that  of  the  public  plants.  And,  finally,  the  uniformly 
smaller  proportionate  expenditure  by  the  companies  for 
repairs,  while  it  may  depend  slightly  upon  greater  size  of 
plant,  and  while  it  can  in  instances  be  accounted  for  on 
other  grounds,  is  probably  due  to  more  efficient  manage- 
ment  and  superior  equipment. 


This  study,  made  independently  after  the  writer  had 
finished  his  investigation  of  the  physical  development  of 
the  two  groups  of  plants,  seems  not  only  to  confirm  the 
earlier  conclusions  reached,  but  also  these  later  conclu- 
sions derive  their  validity  largely  from  the  earlier  analyses. 
Did  we  not  have  some  tangible  evidence  regarding  the 
physical  conditions  of  our  plants,  we  would  have  great 
difficulty  in  knowing  whether  a  given  policy  of  investment 
and  depreciation  is  sound  or  the  reverse.  In  order  not  to  be 
led  astray,  the  investigator  of  problems  such  as  these  must 
endeavor  impartially  to  consider  all  of  the  factors  in- 
volved, and  even  then  allowance  must  be  made  for  excep- 
tional cases,  for  local  conditions,  and  for  other  considera- 
tions which  are  too  intangible  to  appear  in  any  published 
records.  In  order  to  discover  whether  the  private  plants 
have  been,  in  the  ideal  sense,  wisely  financed,  it  would  be 
necessary  to  go  through  the  books  of  many  a  voluntary 
association  and  to  delve  into  the  secret  coimcils  of  many 
a  group  of  investors. 

But  it  is  not  our  purpose  to  attempt  here  to  develop  a 
program  of  financial  reform  for  the  electric  light  and  power 
business  of  the  State,if ,  indeed,  such  be  needed  after  thirty 
years  of  judicious  regulation,  free  from  any  political  bias. 
We  merely  wish  to  make  an  honest  comparison  of  public 
with  private  enterprise.  And,  in  the  important  particular 
which  has  just  been  considered,  a  point  in  which  private 
business  frequently  goes  wrong  and  in  which  public  busi- 
ness, unrestricted,  almost  invariably  fails,  our  group  of 
companies,  many  of  them  far  from  ideal,  some  of  them,  it 
may  be,  controlled  by  individuals  whose  chief  concern  is 
to  make  profits  out  of  them,  and  subject  only  indirectly  to 
commission  control  of  their  depreciation  policy,  have,  in 
the  ultimate  analysis,  in  spite  of  superficial  appearances, 
given  an  equally  good  if  not  better  account  of  themselves 
than  have  the  corresponding  group  of  municipal  plants, 
which  have  been  definitely  restricted  as  to  the  policy  which 


1 


224 


MUNICIPAL  ELECTRIC  LIGHTING 


they  shall  pursue.  Regardless,  however,  of  what  may  have 
been  the  annual  allowances  for  repairs  and  depreciation, 
the  local  survey  will  presently  disclose  the  fact  that  the 
municipal  plants  in  general  have  not  been  so  well  kept  up 
as  have  the  private  plants. 

The  reader  might  very  properly  ask  if  it  is  not  possible 
that  the  policy  followed  by  the  Board  of  Gas  and  Electric 
Light  Conmiissioners  regarding  the  increase  of  capital, 
may  have  become  more  Uberal  during  the  past  two  years, 
thus  leading  to  the  noticeable  increase  in  plant  invest- 
ment, which  might  be  occasioned  partially  by  the  capi- 
talization of  depreciation  in  the  issue  of  new  stock, 
as  well  as  by  the  supposed  practice  of  covering  up  losses 
in  operation  by  the  floating  of  coupon  notes  which  may 
ultimately  be  funded  or  capitalized.  Such,  however,  is 
decidedly  not  the  case.  ^  In  those  very  years  in  which  the 
investment  was  increasing  most  rapidly,  the  laws,  at  the 
urgent  request  of  the  Commissioners,  were  being  made 
more  strict.  Holding  companies  were  abolished,^  the  au- 
thority of  the  Board  over  voluntary  associations  was  more 
definitely  extended,*  and  the  control  over  stock  and  bond 
issued  was  so  increased  that  the  use  to  which  new  capital 
should  be  put  is  to  be  absolutely  prescribed  by  the  Board.* 
Notwithstanding  these  recent  restrictions,  however,  there 
was  no  decrease  in  the  rate  of  issue  of  new  stock  during  the 
last  two  years,  while  for  all  of  the  companies  in  the  State 
there  has  been  an  actual  diminution  in  the  aggregate 
amoimt  of  notes  and  bonds  outstanding.  For  our  particu- 
lar group  of  plants  there  was,  during  the  year  1914-15, 
an  increase  of  stock  issues  to  the  extent  of  $368,300,  and 


*  Though  Mr.  Forrest  E.  Barker,  who  was  for  nearly  thirty  years  a 
member  of  the  Massachusetts  Board  of  Gas  and  Electric  Light  Commis- 
sioners, and  for  twenty  years  its  chairman,  died  in  1914,  the  Board  in 
its  policies  seems  to  have  been  little  aflPected  by  this  loss,  —  in  fact  it 
seems  to  be  growing  even  more  strict  in  its  regulation. 

»  Mass.,  1913,  ch.  597.  >  Mass.,  1913,  ch.  509. 

*  Bdass.,  1914,  ch.  742,  sect.  39. 


IN  MASSACHUSETTS 


225 


a  decrease  in  notes  payable  of  $115,769,  while  the  bond 
issues  remained  unchanged.  This,  upon  the  whole,  surely 
indicates  a  healthy  condition  of  finance. 

2.  Other  Comparisons  of  Financial  Results  op 

Operation 

Perhaps  it  will  be  of  some  interest  to  attempt  a  few 
additional  comparisons  of  the  financial  results  of  operation 
in  the  two  groups  of  plants.  Accordingly,  our  first  concern 
is  to  make  the  data,  as  nearly  as  may  be,  comparable.  The 
accompanying  tables  (Tables  33,  34,  35,  and  36)  indicate 
the  relations  which  exist. 

In  Table  33,  we  note  that,  when  the  street  lighting  in- 
come of  the  companies  is  deducted  from  the  gross  income, 
and  when  the  taxes  paid  are  eUminated,  the  comparable 
operating  ratios  are  66.8  per  cent  for  the  companies  and 
83.7,  more  than  25  per  cent  higher,  for  the  municipal  plants. 
The  difference  in  favor  of  the  former  is  even  more  marked 
if  we  omit  the  amount  paid  for  salaries  of  corporation 
officials  —  an  expense  not  incurred  by  the  pubHc  plants. 

Again,  in  Table  34,  it  appears  that  the  comparable  net 
income  is  nearly  four  times  as  great  for  the  companies  as 
for  the  municipal  plants.  Since,  however,  on  account  of 
their  greater  sales  of  current,  the  companies  would  be 
expected  to  have  a  larger  net  income,  we  can  make  an  ad- 
justment for  this  difference  by  assummg  that  they  should 
have  a  net  income  in  proportion  to  the  extent  of  their 
business,  84  per  cent  greater  than  that  of  the  other  group. 
But,  even  when  this  allowance  is  made,  we  find  that  they 
still  have  an  advantage  of  about  $200,000  over  the  munici- 
pal plants,  an  amount  equal  to  a  little  less  than  4  per  cent 
on  their  entire  investment.  Perhaps  another  slight  ad- 
justment should  be  made  in  order  to  allow  for  their  lower 
expenses  of  production  on  account  of  greater  size.  To 
attempt  this,,  however,  might  cause  us  to  beg  the  whole 
question,  because  it  is  largely  due  to  their  greater  effi- 


',i'- 


|4| 


«26  MUNICIPAL  ELECTRIC  LIGHTING 

Table  33.   Generatino  Plants:  Comparison  of  Financul 

Results  of  Operation  * 

Munieipid 
Companies  Plant* 

Operating  income $1,417,235        $671,761 

Deduct  street  lighting  income 264,641 

Comparable  income $1.152,594         671,761 

Operating  expenses $872,935       $562,648 

Operating  ratio 61 .6% 

Deduct  taxes 104,591 

Comparable  (?)  expenses  (a) $768,344         562,643 

Deduct  salaries  of  oflBcers 48,200 

Comparable  expenses  (6) $720,144         562,643 

Comparable  operating  ratio  (a) 66 . 8%  83  7% 

Comparable  operating  ratio  (b) 62.6%  83.7% 

1  Holyoke  exduded  in  all  of  these  tables. 


Table  34.  Generating  Plants:  Comparison  of  Financial 
Results  of  Operation  {continued) 

Municipal 
Companiet  ptants 

Net  income $544,300       $109,118 

Deduct  street  lighting  income 264,641 

Total $279,659 

Add  taxes  paid 104.591 

Comparable  net  income  (a) $384,250         109,118 

Add  salaries  of  officers 48,200 

Comparable  net  income  (6) $432,450         109,118 

Kilowatt  hours  sold  for   all  purposes  except 

street  lighting 20,944.853    11.394,749 

Excess  of  sales  of   companies   over   sales  of 

municipal  plants 84% 

Expected  net  income  of  companies  (84%  more 

than  that  of  municipal  plants) $200,777 

Advantage  of  companies  (a) 183,473 

(6) 281,673 


IN  MASSACHUSETTS 


227 


Table  35.  Generating  Plants:  Comparison  of  Financial 
Results  of  Operation  {contimied) 


Companies 
Case  (1) 
Actual  disposal  of  net  income: 

Comparable  net  income  (a) $384,250 

Comparable  net  income  (6) 432,450 

Profit  and  loss  income $22,222 


Total  (a) 
Total  (6) . 


Actual  charges  against  net  income: 

Interest 

Depreciation 

All  other  charges 


$406,472 
454,672 


90,094 
56,314 
23,415 


Surplus  (a) $236,649 

(b) £84,849 

Per  cent  on  capital  stock  ($2,964,600)  (a) .  8.0 

(6).  9.5 
Per  cent  on  total  investment  ($5,284,275) 

(o) 4.5 

(6) 5.4 

Case  (2)                                           ,    .    " 
Assuming  equal  rate  of  depreciation  (3%), 
add  to  company  charges $100,296 

Surplus  (a) 136,353 

184,722 

4.6 
6.2 

2.6 
8.5 


(6) 
Equivalent  to  per  c^it  on  capital  stock 

of  (a) 


(b) 


Equivalent  to  per  cent  on  total  investment 

of  (a) 

ib) 

Case  (3) 
Charging    against    municipal    net    income, 
sinking    fund    and    maturing    debt   pay- 
ments, as    the   Massachusetts  Law  pre- 
scribes: 

Sinking  fund  charges 

Bonds  and  notes  paid 

Total  charges  (including- abeve) 

Deficit 

Per  cent  on  total  investment 

•  Deficit. 


Municipal 
plani* 


$109,118 


2,957 


$112,075 


62,143 

92,306 

8,096 


Total $169,823       $162,545 


$50A70* 


i.7t 


$  24,596 
55.797 

$242,938 

$130,863 
4.5 


t  LOM. 


328 


MUNICIPAL  ELECTRIC  LIGHTING 


Table  36.  Generating  Plants:  Comparison  of  Financial 
Results  of  Operation  {concluded) 


Companies 
Case(l) 
Theoretical  disposal  of  net  income: 

Assuming  that  the  same  rate  of  depreci- 
ation (3%)  is  charged  off  in  both  cases 
and  that  the  same  rate  of  interest  (4%) 
is  paid  on  the  total  investment. 
,  Comparable  net  income   (including  profit 

and  loss  income  (a) $406,472 

(b) 454,672 

Charges  against  net  income: 

Interest  at  4  % 211,371 

Depreciation  at  3% 158,528 

All  other  charges 23,415 

Total $393.314 

Surplus  (a) '      13,158 

(6) 61.358 

Per  cent  on  total  investment  (a). .  O.S 

(6)..  1.2 


Municipal 
planti 


$112,075 


116,953 

87,715 

8.096 

212,774 


100,699* 


S4f 


flfl 


Case  (2) 

Assuming  only  an  equal  rate  of  depreci- 
ation (3%)  charged  off  in  each  case,  but 
that  interest  is  paid  by  municipal  plants 
on  their  entire  investment  at  the  cus- 
tomary rate  (4%). 
Charges  against  net  income: 

Interest $90,094       $116,953 

Depreciation '.     158,528  87,715 

All  other  charges 23,415  8,096 

Total $272,037       $212,774 

.Surplus  (a) $1^,435      $100,699* 

(6) $182,804 

Equivalent  to  dividend  on  total  , 

investment  of  (a) 2.6%  54%t 

.    (6) :. 3.5% 


IN  MASSACHUSETTS 


229 


ciency  that  they  reap  the  higher  returns,  for  we  have  dis- 
covered that  their  rates  are  in  the  aggregate  slightly  lower 
than  those  of  the  pubHc  plants. 

We  may  also,  as  in  Table  35,  compare  the  actual  dis- 
posal of  net  income  in  the  two  cases,  aside  from  dividend 
payments  of  the  companies,  whereupon  it  is  evident  that 
the  comparable  surplus  of  the  private  plants  is  from  4.5 
to  5.4  per  cent  of  the  total  investment,  according  to 
whether  or  no  we  make  an  allowance  for  officers'  salaries. 
The  pubhc  plants,  on  the  contrary,  are  subject  to  a  deficit 
of  $50,470,  so  that  the  difference  between  the  two  is  nearly 
$300,000.  If,  however,  we  assume  the  same  rate  of  deprecia- 
tion to  be  paid  in  each  case,  the  advantage  of  the  com- 
panies is  reduced  by  about  $100,000.  On  the  other  hand, 
if  the  current  sinking  fund  and  maturing  debt  payments 
be  charged  against  the  pubhc  plants,  —  as  indeed  they 
rightfully  should  be,  since  they  are  an  actual  outlay  result- 
ing from  municipal  ownership,  —  we  must  add  more  than 
$80,000  to  the  deficit  of  the  latter,  so  that  the  spread  be- 
tween the  two  remains  about  as  before. 

Finally,  if  the  same  rate  of  depreciation  be  allowed  in 
each  case,  as  in  Table  36,  and  if  interest  be  computed  upon 
the  entire  municipal  plant  investment,  with  no  subtractions 
for  sinking  fund  and  maturing  debt  payments,  we  find 
that  the  companies  still  have  a  surplus  of  2.5  to  3.5  per  cent 
on  their  investment,  while  the  municipal  plants  have  lost 
an  amount  equal  to  3.4  per  cent  of  their  investment. 
Furthermore,  if  the  interest  be  computed  at  the  lowest 
rate  that  would  have  to  be  paid  by  the  companies  (5  per 
cent),  it  would  be  necessary  to  add  $30,000  to  this  deficit, 
whereby  it  would  be  raised  to  4.5  per  cent.  Viewed  from 
any  angle,  when  the  same  tests,  as  nearly  as  may  be,  are 
applied  to  both,  it  appears  that  the  financial  efficiency 
of  the  companies,  as  measured  by  results,  is  considerably 
ahead  of  that  of  the  other  group. 


52SO 


MUNICIPAL  ELECTRIC  LIGHTING 


8.  The  Cost  of  Street  Lighting  to  the  Municipalities 
OWNING  their  Electric  Plants  * 

Much  ink  has  been  spilled  in  various  vain  attempts  to 
prove  or  disprove  the  advantages  of  municipal  ownership 
by  a  study  of  the  rates  which  are  charged,  or  which  might 
have  been  imposed  under  private  ownership,  or  which 
existed  before  the  change  in  ownership  was  made.   Many 
have  appeared  to  think  that  if  a  municipality  owning  its 
plant  happens  to  secure  its  street  lighting  for  a  little  less 
than  it  would  have  paid  to  some  private  concern,  public 
ownership  is  thereby  demonstrated  to  be  a  success.  Others, 
with  no  purpose  except  to  make  out  as  bad  a  case  as  possi- 
ble for  pubUc  business,  have  unreasonably  included  numer- 
ous imaginary  items  in  the  expenses  which,  as  they  assert 
should  be  charged  against  the  current  which  the  munici- 
palities use  for  street  hghting. 

But,  as  has  already  been  suggested,  rates  are  but  the 
uncertain  reflections  of  the  more  fundamental  elements  in 
the  problem.  In  themselves  they  may  mean  much  or 
nothing;  and  they  are  usually  misleading  if  we  attempt 
from  a  superficial  study  to  draw  conclusions.  Without  a 
doubt,  many  items  of  expense  which  pubhc  plants  are  prone 
to  overlook  must  be  included,  if  we  are  honestly  trying  to 
discover  what  street  lighting  really  costs,  under  municipal 
ownership,  in  the  economic  sense,  as  distinguished  from 
what  is  actually  paid  in  the  commercial  sense.  Just  where 
the  line  should  be  theoretically  drawn,  is  a  difficult  matter 
to  decide. 

Now,  we  have  found  that  the  territory  occupied  by  the 
companies  is  a  much  more  difficult  territory  to  serve  than 
that  of  the  pubhc  plants.  They  have  been  more  hberal 
in  their  extension  pohcy,  and  have  legitimately  incurred  a 
much  greater  proportionate  investment  per  customer  than 
have  the  other  group.  All  in  all,  since  the  character  of  the 
,   *  Cf .  Mass.  G.  &  E.,  xxxi :  804-306.  See  Appendix,  pp.  454,  456. 


IN  MASSACHUSETTS  231 

business  done  seems  to  be  not  much  different  in  the  two 
cases,  we  might  have  expected  somewhat  higher  rates  in 
the  companies  than  in  the  pubhc  plants.  Yet,  in  spite  of 
the  considerations  just  mentioned,  and  in  spite  of  the 
additional  operating  expenses  due  to  taxes,  salaries  of 
officers,  getting  new  business,  rentals,  et  cetera,  we  have 
found  their  average  rateis  somewhat  lower,  particularly 
when  street  lighting  has  been  eliminated. 

Under  these  circumstances,  as  the  munkjipal  plants 
appear  to  have  given  no  advantage  in  the  way  of  lower 
rates  to  their  customers,  and,  in  faet,  in  proportion  to  the 
service  rendered,  have  charged  noticeably  more  than  the 
other  group,  we  are  justified  in  weighing  against  the  street 
lighting  account  all  of  those  charges  actually  incurred  over 
and  above  the  amount  that  can  be  met  out  of  the  net  in- 
come.  In  addition,  we  should  include  some  other  items  of  cost, 

which,  though  not  so  obvious,  are  none  the  less  real.  The 
tables  herewith  given  will  indicate  the  results  of  some  of  the 
various  methods  of  computations  which  may  be  employed. 

Table  37.  Cost  of  Street  Lighting  to  MuNiciPALrnES 
OWNING  their  Generating  Plants  * 

Cost  of  street  lighting  as  it  appears  from  the  returns:  *i  ao  ii o 

Net  income  from  operation $109,118 

Other  items  of  income I^^Sl 

Total.... «112.075 

Charges  against  income 

Interest  actually  paid oo  qaa 

Depreciation Xoa 

Other  cost  items ^'^^ 

Total $162,545 

Deficit  in  return  for  which  street  lightmg  is  secured $50,470 

Number  of  K.W.H.  used  for  street  lighting 8,589,262 

Apparent  cost  per  K.W.H.  (cents) 1-400 

Price  charged  for  street  lighting  by  companies  (cents) 7.575 

Apparent  gain  per  K.W.H.  as  a  result  of  municipal  owner- 
ship (cents) ^'^'^^ 

Equivalent  to  (about) $221,800 

>  H<Jyoke  omitted  throughout. 


MUNICIPAL  ELECTRIC  LIGHTING ' 


Table  38.  Cost  of  Street  LiGHTixa  to  Municipalities 

OWNING  THEIR  GENERATING  PlANTS  (continued) 

Sinking  fund  and  maturing  debt  payments  included   (since 
they  are  incurred  as  a  result  of  municipal  ownership) : 

Total  income  available $112,075 

Total  charges  from  preceding  table $162,545 

Sinking  fund  payments 24,596 

Note  and  bond  payments 55,797 

Total $242,938 

Deficit  to  be  charged  against  street  lighting $130,863 

Apparent  cost  per  K.W.H.  (cents) S.640 

Price  charged  by  com[)anies  (cents) 7.575 

Apparent  gain  (cents) 3.935 

Equivalent  to  (about) $140,400 


Table  39.  Cost  or  Street  Lighting  to  Mitnicipalities 
OWNING  their  Generating  Plants  {continued) 

Add  to  deficit  shown  in  Table  38  the  taxes  lost  by  municipal- 
ities owning  their  plants,  computed  at  the  same  rate  paid 
by  companies: 

(a)  Taxes  at  0.428  (cents)  per  K.W.H.  delivered 64,200 

(6)  Taxes  at  12  per  cent  of  operating  expenses 76,724 

(c)  Taxes  at  2  per  cent  on  total  investment 58,480 

Deficit  (a) $195,063 

(b) 207.587 

(c) 189.343 

Cost  of  street  light  per  K.W.H.  (cents) 

(a) '   5.420 

(b) 5.770 

(c) 5.260 

Gain  per  K.W.H.  (cents) 

(a) 2 . 1 55 

(b) 1 .  805 

(c) 3.315 

Equivalent  to  (o) $77,600 

(b) 64,800 

(e) 82,800 


IN  MASSACHUSETTS 


233 


Table  40.  Cost  of  Street  Lighting  to  Mtjnicipalitieb 
OWNING  their  Generating  Plants  (continued) 

Same  as  Table  39: 
Except,   to  make  the  data  comparable,  add  salaries  of 
oflScers  to  expenses,  computed  at  the  same  rate  per 
K.W.H.  delivered  as  in  the  case  of  the  companies 

(0.200  cents) $30,000 

Equivalent  to  rate  per  K.W.H.  used  for  street  lighting  of 

(cents) 0.830 

Which,  added  to  the  above  rates,  makes  the  cost  of  street 
lighting  per  K.W.H.  (cents) 

(a) 6 .  250 

(6) 6.600 

(c) 6.090 

Total  apparent  gam  to  municipalities: 

(a) $47,600 

(6) 34,800 

(c) 52,800 


Table  41.  Cost  of  Street  Lighting  to  Municipalities 
OWNING  their  Generating  Plants  (concluded) 

Interest  computed  on  entire  investment  (at  rate  paid  on  out- 
standing debt) : 

Total  available  income $112,075 

Charges  against  income: 

Interest  (@  4%) $116,953 

Depreciation 92,306 

Other  cost  items 8.096 

Total $217,355 

Add  taxes  lost  (0 .  428  cents  per  K.W.H.  delivered) 64.200 

Total  charges $281,555 

Deficit $169.480 

Cost  per  K.W.H.  for  street  lighting  (cents) 4.710 

Gain  over  company  rate  (7.575  cents) 2.865 

Equivalent  to  (about) $101,100 

In  order  to  put  the  public  plants  on  the  same  bases  for 
comparison  as  the  companies,  we  should  deduct  from 
this  apparent  gain: 

(a)  Additional  interest  which  would  be  paid  under 
private  ownership  (1%) 29,238 

(b)  Salaries  which  would  have  been  paid  to  ofBcers.  30.000 

Total $59,238 

Equivalent  to  rate  per  K.W.H.  used  for  street  lighting  of 

(cents) 1 .  650 

Making  cost  per  K.W.H.  (cents) 6.360 

Apparent  gain  from  municipal  ownership  of $41,800 

Equivalent  to  per  cent  on  investment  ($2,923,825)  of . . .  1.4+ 


234 


MUNICIPAL  ELECTRIC  LrOHTING 


IN  MASSACHUSETTS 


235 


In  Table  37  are  indicated  the  ordinary  charges  against 
net  income,  aside  from  sinking  fund  and  note  and  bond 
payments,  which  were  actually  incurred  during  the  year. 
From  this  simple  analysis  it  would  appear  that  the  plants 
were  subject  to  a  deficit  of  only  $50,470,  which  is  equiva- 
lent to  1.400  cents  per  kilowatt  hour  used  for  street  light- 
ing, or  6.175  cents  below  the  average  rate  charged  for  this 
service  by  the  group  of  companies  under  consideration. 
This  would  be  equal  to  an  apparent  saving  of  $221,800 
as  a  result  of  municipal  ownership.  Unfortunately  this  is 
literally  too  good  to  be  true. 

Our  next  table  (38)  carries  the  analysis  somewhat  farther 
and  includes  the  sinking  fund  and  maturing  debt  pay- 
ments, which  are  a  current  diarge  that  must  be  met  out 
of  the  tax  levy  if  not  out  of  income,  and  which  would  never 
have  been  incurred  had  not  the  municipality  owned  its 
plant.  Having  made  this  addition,  we  find  that  the  deficit 
which  might  be  considered  the  "cost"  of  street  lighting, 
is  increased  to  $130,863,  and  that  the  apparent  saving 
under  public  ownership  is  $140,400. 

If  any  one  should  ask  what  policy  is  to  be  pursued  when 
the  debt  has  all  been  paid  off,  the  logical  reply  is  that,  so 
far  as  can  be  determined  from  our  study  of  the  situation, 
it  is  scarcely  probable  that  a  progressive  plant  will  ever 
be  debt  free,  unless  it  draws  upon  the  tax  levy  for  capital 
charges.  There  must  be  constant  new  investment  in  order 
to  keep  up  with  the  progress  of  the  arts  and  the  growth 
of  industry  and  population. 

But  thus  far  we  have  failed  to  make  allowance  for  the 
fact  that  the  pubHc  plants  have  not  been  paying  the  taxes 
which  a  private  business  would  have  paid.  The  income  thus 
lost  must  simply  be  made  good  by  levying  at  a  higher  rate 
upon  other  private  property.  Bricks  cannot  be  made  without 
straw:  municipahties  cannot  be  financed  without  funds. 
Expenses  foregone  should  result  in  correspondingly  lower 
charges  for  service  under  municipal  ownership.   Since  we 


have  found  this  not  to  be  the  case,  and  since  the  rates 
appear  to  be  comparatively  higher  for  the  public  plants, 
it  is  logical  to  charge  against  the  street  lighting  account 
the  additional  contributions  made  by  the  taxpayers  —  a 
burden  of  which  they  would  have  been  relieved,  had  the 
electric  plants  been  privately  owned.  This  is  very  tangibly 
a  part  of  the  real  cost  to  the  community.  Doubtless  the 
principle  here  involved  is  too  well  understood  to  merit 
further  comment.  ^ 

Accordingly,  we  have  computed  the  taxes  lost  at  the 
same  rate  as  is  paid  by  the  companies  (Table  39).  This 
can  be  variously  estimated  at  0.428  cents  per  K.W.H. 
delivered,  at  12  per  cent  of  the  operating  expenses,  or  at 
about  2  per  cent  of  the  total  investment,  based  upon  the 
relative  ajnount  paid  for  taxes  by  the  companies.  Thus 
the  deficit  is  increased  by  about  $60,000  to  $75,000,  and 
the  gain  through  decreased  cost  of  street  lighting  as  a  result 
of  public  ownership,  drops  to  about  $75,000.  ^ 

But  municipal  light  boards,  selectmen,  mayors  and 
aldermen,  municipal  treasurers  and  auditors,  not  to  men- 
tion others,  have  contributed  to  the  municipal  plants,  with 

*  In  England,  and  probably  in  Germany,  surpluses  earned  by  the  mu- 
nicipal lighting  department  are  frequently  used  for  other  public  pur- 
poses, and  thus  effect  a  lowering  of  the  tax  rates.  This,  however,  could 
not  happen  in  Massachusetts.   Cf.  Mass.,  1914,  ch.  742,  sect.  114. 

'  The  computation  based  on  the  total  investment  makes  the  estimated 
taxes  dispropjortionately  small,  due  to  the  conditions  of  investment 
existing  in  the  public  plants,  as  previously  discussed.  Had  the  plants 
been  privately  owned,  so  far  as  we  can  judge  from  our  study,  taxes  would 
have  been  secured  on  a  considerably  increased  investment;  hence  the 
municipalities  have  lost  relatively  a  greater  sum. 

Probably  the  percentage  computation,  12  per  cent  of  the  operating 
expenses,  is  the  closest  approximation,  and,  though  the  figures  thus 
reached  are  absolutely  highest,  the  public  plants  really  are  given  a  con- 
siderable advantage,  for  without  salaries  of  officers,  etc.,  the  taxes  would 
form  a  comparatively  higher  portion  of  the  total  expenses. 

The  computed  amount  based  on  the  rate  per  kilowatt  hour  delivered, 
is  reasonably  satisfactory,  though  probably  too  low,  since,  for  obvious 
reasons,  the  unit  cost  for  this  item  might  tend  to  grow  higher  as  the  out- 
put of  the  plant  becomes  smaller. 


i 


236 


MUNICIPAL  ELECTRIC  UGHTING 


IN  MASSACHUSETTS 


237 


1 


r. 


little  or  no  remuneration,  the  services  which,  in  the  com- 
panies, are  performed  by  the  salaried  oflScers.  This  freely 
rendered  service  should  be  reflected  in  lower  commercial 
rates,  and,  in  lieu  of  that,  the  street  lighting  should  cost 
correspondingly  less.  Hence  another  adjustment  may 
be  made  for  this  item,  estimated  at  the  same  rate  paid 
by  the  companies,  if  we  wish  to  find  out  how  much  the 
street  lighting  is  really  costing.  ^  Having  made  this  cal- 
culation, the  "gain"  of  the  public  plants  is  further  re- 
duced to  $35,000  or  $45,000  — -  not  a  very  princely  sum 
(Table  40). 

We  may,  however,  approach  the  problem  from  another 
point  of  view,  and  in  addition  to  the  taxes  lost  we  can 
include  interest,  at  the  customary  rate,  on  the  total  invest- 
ment, —  not  merely  on  the  bonds  and  notes  outstanding 
(Table  41).  The  resulting  figures  seem  to  indicate  that 
the  municipalities  have  saved  about  2.865  cents  per  kilo- 
watt hour  on  their  street  lighting,  or  in  the  aggregate  some- 
what more  than  $101,000.  If  the  salaries  which  would 
have  been  paid  to  officers  be  also  added,  so  that  our  stand- 
ard of  measurement  may  be  kept  unchanged  from  the 
point  of  view  of  operating  efficiency,  we  must  reduce  this 
amount  by  about  $30,000.  And,  finally,  if  allowance  be 
made  for  the  higher  rate  of  interest  which  would  have  been 
paid  under  private  ownership  (at  least  1  per  cent)  and  which 
should  also  be  reflected  in  lower  cost  of  street  Hghting,  we 
must  make  a  further  reduction  of  almost  $30,000,  so  that 
the  total  advantage  is  sUghtly  less  than  $42,000,  or  1.4 
per  cent  on  the  entire  investment.  Naturally  the  sinking 
fund  and  maturing  debt  payments  are  not  included  in  this 
particular  computation,  for,  since  we  have  charged  interest 

*  It  makes  no  diflference  whether  we  deduct  from  the  company  rate, 
which  is  our  standard  of  measurement,  the  saving  in  costs  which  theo- 
retically ahoidd  be  effected  in  such  cases  as  this  —  and  then  note  the 
difference  between  this  corrected  rate  and  the  actual  municipal  rate; 
or  whether  we  simply  add  the  item  to  the  previously  mdicated  cost  of 
Street  lighting,  and  subtract  the  total  from  our  standard,  7.575. 


on  the  total  investment,  thai  would  seem  to  amount  to 
"paying  interest  on  the  debt  already  paid." 

As  to  whether  or  not  interest  on  the  total  investment 
should  be  included  in  such  cases  as  this,  where  a  consider- 
able  portion  of  the  debt  has  been  paid  off  and  where  an- 
other portion  has  been  "borrowed"  from  the  taxpayers 
in  the  form  of  "appropriations  for  construction,"  there  has 
been  much  diversity  of  opinion.    The  writer,  however,  is 
clearly  convinced  that  the  position  which  he  has  taken  is 
logically  sound.  ^   In  order  to  find  out  what  a  service  ren- 
dered by  the  public  really  costs  in  the  economic  sense,  we 
must  not  lose  sight  of  any  of  the  capital  involved  in  the 
production  of  that  service.   The  mere  fact  that  bonds  and 
notes  have  been  paid  off  through  the  tax  levy,  or  even  out 
of  earnings,  does  not  in  any  particular  alter  the  fact  that 
just  so  much  capital  has  been  invested  by  the  public,  on 
which  a  fair  return  should  be  earned  —  and  this,  in  the 
present  instance,  would  be  expected  to  show  itself  in  the 
lower  cost  of  street  lights.   Even  if  the  debt  had  been  can- 
celed out  of  earnings,  it  must  still  be  remembered  that 
the  customer  has  contributed,  yes,  invested,  his  money,  as 
a  result  of  paying  more  for  the  service  than  that  service 
cost  the  municipality.   This  does  not  at  all  mean  that  he 
would  capitalize  against  the  customers  of  a  municipal  plant 
past  profits  in  operation.   It  does  mean  that,  in  computing 
the  actual  cost  of  street  lighting,  we  must  not  let  the  higher 
charges  to  the  consumer  carry  the  street  Hghting  account. 

In  practically  all  cases,  as  just  stated,  the  investment 
in  addition  to  that  represented  by  the  outstanding  debt, 
has  been  created  by  means  of  appropriations  from  the  tax 

*  The  view  herein  held  is  confirmed  by  letters  which  the  writer  has 
received  from  New  York  Public  Service  Commission  of  the  Fu-st  District 
and  from  the  Wisconsin  Railway  Conunission.  It  is  also  consistent 
with  the  Massachusetts  law  regardmg  the  cost  of  service  of  the  public 
plants;  and  for  nearly  twenty  years,  the  Massachusetts  Board  of  Gas 
and  Electric  Light  Commissioners  has  considered  interest  on  the  total 
investment  in  making  its  calculations. 


u 


238 


MUNICIPAL  ELECTRIC  LIGHTING 


1 


levy  either  for  construction  or  for  the  payment  of  maturing 
debt;  hence  the  question  is  reheved  of  some  of  its  complex- 
ity. The  practice  followed  by  some  of  the  public  plants  of 
appropriating  liberally  from  the  tax  levy  for  street  lights, 
depreciation,  and  interest  payments,  and  then  appropriat- 
ing from  earnings  for  note  and  bond  payments,  is  a  naive 
way  of  covering  up  the  actual  financial  conditions.  In- 
stances of  bona  fide  payment  out  of  earnings  are  exceed- 
ingly rare  except  in  the  case  of  Holyoke.^ 

So  far  as  the  writer  can  determine,  the  case  is  not  par- 
ticulariy  affected,  whether,  on  the  one  hand,  to  the  cus- 
tomary charges  against  net  income  we  add  sinking  fund 
and  maturing  debt  payments  as  well  as  taxes  lost  (together 
with  the  theoretical  item  of  "salaries  of  officers,"  in  order 
to  be  exact),  or,  on  the  other  hand,  omitting  sinking  fund 
and  debt  payments,  we  include  the  interest  on  the  entire 
investment.  The  latter  position,  however,  would  appear 
to  be  the  more  correct  one. 

What  does  the  small  advantage  in  the  price  paid  for 
street  hghting  according  to  these  computations  really 
mean?  In  the  light  of  our  eariier  investigations  it  signifies 
very  little.  In  the  first  place,  even  this  "profit"  would 
probably  be  wiped  out  if  we  were  to  apply  all  along  the  line 
the  same  tests  to  the  pubHc  plants  as  to  the  private  plants. 
In  addition  to  taxes  and  salaries  of  officers  which  have 
already  been  discussed,  there  would  be  interest  on  a  higher 
and  frequently  much  needed  investment,  together  with 
a  number  of  other  operating  charges.  In  the  second  place, 
we  should  expect  the  street  Hghting  costs  in  the  municipal 
plants  to  be  much  lower  than  in  the  other  group,  because 
of  the  longer  number  of  hours'  use  of  lamps  per  night  (9.1 
hours  as  contrasted  with  7.6  hours),  as  well  as  because  of 

^  So  far  as,  the  writer  is  informed,  the  municipal  plant  of  South  Norwalk, 
Connecticut,  is  the  only  public  plant  which  makes  allowance  for  taxes  lost, 
interest  on  total  investment,  and  in  addition  a  reasonable  return  on  capital 
invested. 


IN  MASSACHUSETTS 


239 


the  more  favorable  territory  served  and  the  shorter  lines 
per  lamp  (511  feet  vs.  617  feet).  But,  on  the  other  hand, 
many  gains  along  other  fines  under  private  ownership 
might  be  cited.  The  tables  show  that  the  companies  not 
only  could  have  given  absolutely  free  street  lighting  to  their 
municipafities,  but  also  that  in  addition  they  would  have 
been  able  to  make  a  considerable  profit  if  put  on  the  same 
basis  as  the  public  plants.  There  are  also  good  reasons 
for  believing  that  the  quality  of  street  lighting  service 
rendered  by  the  public  plants  is,  in  some  instances  at  any 
rate,  inferior  to  that  demanded  and  secured  from  the 
privately  owned  plants. 

However,  it  is  futile  to  carry  this  discussion  further. 
The  results  of  our  analyses  in  this  chapter  seem  to  indicate 
that  the  municipal  plants  in  general  have  simply  held  their 
own  financially,  even  though,  in  some  instances,  it  may 
have  been  at  the  customer's  expense.  The  actual  "profit" 
which  they  are  at  present  making  is  practically  negligible. 

Having  made  a  similar  study  of  the  cost  of  street  lighting 
for  the  year  1909-10,  the  writer  finds  that  the  conditions 
then  were  not  greatly  different  from  those  met  with  in 
1914-15.  For  earlier  years  it  is  difficult  to  secure  accurate 
information,  as  the  current  was  not  usually  metered. 

SuiilMABT 

The  main  points  developed  in  the  present  chapter  may 
be  summed  up  as  follows: 

1.  The  interest  rates  paid  by  the  municipal  plants  arc 
from  1  to  1.5  per  cent  lower  than  the  rates  paid  by  the 
companies.  The  average  rate  of  dividends  paid  by  the 
latter  are  at  present  rather  liberal,  though  probably  not 
excessive,  in  view  of  the  earfier  low  rates  and  complete 
absence  of  returns  in  several  cases. 

2.  While  the  average  depreciation  allowances  made  by 
the  companies  in  1914-15  was  relatively  much  lower  than 
that  made  by  the  public  plant3f  this  year  is  found  not  to 


f 

It 

V 
i 

\ 


• 


L 


240 


MUNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


241 


1 


be  by  any  means  typical.  On  the  contrary,  during  the 
five-year  period  studied,  the  average  rate  charged  off  by 
the  private  plants  was  fully  as  high  as  that  written  off  ac- 
cording to  law  by  the  other  group.  A  few  of  the  com- 
panies, however,  have  been  very  lax  in  this  regard. 

3.  The  average  expenditiu^s  for  repairs  during  the  period 
1910  to  1915  have  been  relatively,  though  not  conspicu- 
ously, lower  for  the  companies. 

4.  When  put  on  a  reasonably  comparable  basis,  the 
financial  showing  made  by  the  municipal  plants  is  consid- 
erably less  satisfactory  than  that  made  by  the  companies. 

5.  The  only  financial  gain  accruing  to  the  communities 
owning  their  plants,  is  that  they  apparently  secure  their 
street  Hghting  at  a  slightly  lower  cost  per  kilowatt  hour 
than  would  otherwise  have  been  the  case.  This  gain,  how- 
ever, is  too  small  to  be  of  any  consequence,  when  consid- 
ered in  connection  with  the  facts  as  we  now  know  them. 

6.  There  does  not  seem  to  be  any  direct  relation  existing 
between  the  size  of  the  municipal  plants  and  the  estimated 
financial  gains  accruing  through  a  lower  cost  for  street 
lighting. 

Tentative  Conclusion  on  the  Financial  Results  of  Public  Ownership 

Finally,  so  far  as  the  financial  aspects  of  operation  are 
concerned,  there  seems  to  be  Uttle  in  the  rates  and  less  in 
the  investment  policy  to  cause  us  to  feel  optimistic  on  the 
subject  of  municipal  ownership  in  the  cases  studied.  Nor, 
on  the  other  hand,  have  they  apparently  made  any  con- 
spicuous failures,  except  in  one  or  two  instances.^  They 
simply  seem  to  have  had  the  pleasure  of  doing  for  them- 
selves, with  sHght  tangible  returns,  what  might  have  been 
done,  and  perhaps  better  done,  by  private  enterprise. 
When  we  take  into  consideration  the  great  loss  which  is 
certain  to  result  when  a  number  of  the  generating  plants 
are  junked  and  current  is  purchased  from  private  con- 

^  HuU  and  Wakefield. 


cems,  —  a  tendency  which  is  at  present  well  defined,  both 
in  the  public  and  the  smaller  private  plants,  —  the  out- 
look is  not  reassuring. 

True  it  is,  in  many  cases  considerations  other  than  finan- 
cial  may  be  of  the  greater  importance  in  questions  of  pub- 
lic ownership.  To  this  aspect  of  the  matter  some  attention 
has  already  been  directed  and  further  reference  will  pres- 
ently be  made.  Yet  we  must  not  forget  that  a  commercial 
ent&rjyrise,  whether  in  private  or  in  public  hands,  should 
normally  meet  both  the  physical  and  the  financial  tests. 
From  the  coldly  practical  point  of  view,  if  our  public  plants 
faQ  in  either  of  these  tests  when  compared  with  private 
industry,  the  burden  of  proof  being  naturally  put  upon 
them,  they  cannot  be  called  a  success.   If  it  be  contended 
that  our  decision  should  be  based  on  more  ideal  and  lesa 
tangible  considerations,  it  may  be  suggested  in  reply  that 
we  are  in  danger  of  losing  ourselves  in  a  maze  of  uncer- 
tainties even  greater  than  those  at  present  encountered,  as  a 
consequence  of  attempting  primarily  to  measure  the  results 
of  commercial  business  by  other  than  commercial  tests. 
It  is  a  question  whether  the  demands  of  political  expedi- 
ency should  normally  ever  outweigh  the  physical  and 
financial  efficiency  in  matters  of  this  kind.    And,  surely, 
if  the  commercial  tests  fail,  there  must  be  some  unusually 
urgent  political  or  social  motive  in  order  to  justify  any 
change  from  private  ownership. 


14 


CHAPTER  Vm 

FINANCIAL  STATISTICS  OF  THE  PUKCHASING  PLANTS 

1.  The  Capital  Accoxtst  > 

After  the  detailed  analysis  which  has  been  made  of 
the  financial  data  of  the  two  groups  of  generating  plants, 
it  will  be  possible  to  review  rapidly  the  less  important,  but 
constantly  increasing  group  of  plants  which  purchase  their 
current.  The  same  methods  of  study  will  be  followed  as  in 
the  preceding  case. 

Accordingly,  we  find  that  it  makes  practically  no  dif- 
ference whether  we  select  as  the  total  investment  in  the 
municipal  plants,  the  aggregate  liabilities  created  by  the 
outstanding  debt,  and  the  appropriations  from  the  tax 
levy  for  debt  payments  and  for  construction,  or,  on  the 
other  hand,  simply  use  the  gross  plant  cost  as  explained 
in  the  earlier  chapter.  The  latter  is  only  a  fraction  of  one 
per  cent  higher  than  the  former.  Hence  these  figures  have 
been  chosen  to  compare  with  the  total  plant  cost  of  our 
group  of  16  companies.* 

It  appears  from  Table  42  that  the  total  mvestment  of 
the  comparable  companies  is  56  per  cent  higher  than  that 
of  the  municipal  plants,  omitting  Norwood,  and  that  the 
average  investment  per  plant  is  about  two  times  as  great 
in  the  former  as  in  the  latter,  though  their  output  of 
current  is  less  than  70  per  cent  higher.    This  disparity  is 

*  Appendix,  pp.  466-467. 

*  The  aggregate  of  the  capital  and  loans  of  the  private  plants  out- 
standing is  a  little  too  high  (about  $68,000),  due  to  the  fact  that  three  of 
the  companies.  North  Brookfield,  Provincetown,  and  Randolph,  are 
unincorporated  and  have  issued  an  excess  amount  of  stock,  which  has 
not  been  approved  by  the  Board.  When  these  exceptions  are  deducted, 
the  capital  and  loan  liabilities  are  almost  equal  to  the  cost  of  plant  as 
carried  in  the  construction  accounts. 


MUNICIPAL  ELECTRIC  LIGHTING 


243 


Table  42.  Comparative  Investment  Data 
(Purchasing  Plants) 

Companiet        Municipal  plani$ 

(16)  m  i 

Total  investment $1,110,738         $579,508 

(905,060)' 

'   Average  per  plant 70,000  $29,000  . 

(60,337)« 

Net  additions  during  year $111,632  $42,680 

New  construction  during  year 111,632  53,567 

Number  K.W.H.  delivered 3,221,028  2,428,240 

Average  per  plant 201,314  121,412 

Average  purchased  per  plant 266,715  157,173 

Connected  load  (K. W.) 7,793  6.638 

Average  per  plant 487  332 

Length  of  lines  (miles) 1,100  1,458 

Average  per  plant 68.7  72.9 

(71.6)* 

Number  of  poles  per  plant 750  794 

(792)« 

Investment  per  K.W.H.  delivered  (cents) . .  34  24 

(30)« 

Investment  per  K.W.  connected  load $144  $81 

(128)« 

Investment  per  mile  of  line $1,010  $400 

(843)« 

Percentage  of  total  lines  in  commercial  lines            68. 6  65 . 7 

Investment  in  commercial  lines $760,000(?)  $380,000(?) 

Investment  per  customer $126  $66 

(112)« 

Operating  income  (street  lighting  out) ....       $227,528  $150,884 

Investment  per  dollar  of  operating  income .           $4 .  90  $3 .  90 

(4.70)« 

Total  number  of  customers 6,021  5,776 

Inhabitants  of  territory  served 87,480  53,581 

»  Norwood  omitted.  •  Manchester  omitted,  as  all  lines  are  miderground. 

caused,  partially  at  any  rate,  by  investment  in  dead  as- 
sets. The  fact  that  6  of  the  public  plants  do  not  value 
their  land,  which  is  returned  as  "owned  by  the  town," 
and  that  6  others  report  no  real  estate  whatever,  helps  to 
keep  their  investment  disproportionately  low,  though  real 
estate  should  not  be  a  very  significent  item  in  the  capital 
account  of  a  distributmg  plant.   But,  from  our  earlier 


1244 


MUNICIPAL  ELECnilC  LIGHTING 


IN  MASSACHUSETTS 


845 


study,  it  will  be  recalled  that  the  municipal  plants  have, 
on  the  average,  a  somewhat  more  extensive  distributing 
system,  the  investment  in  which  might  be  expected  to  be 
suflScient  to  cancel  the  lack  of  investment  in  real  estate. 
(In  these  comparisons  it  seems  best  to  omit  the  company 
of  Manchester,  which  has  put  $150,000  into  underground 
construction  —  a  rather  large  venture  for  so  small  a  plant, 
but  necessary  m  order  to  satisfy  the  "artistic"  tastes  of 
the  people  of  the  town.) 

The  figures  here  presented  serve  to  show  more  clearly 
the  truth  of  our  earlier  suggestion  to  the  effect  that  the 
relations  which  exist  between  the  two  groups  of  purchas- 
ing plants  are  very  different  from  those  found  in  the  case 
of  the  generating  plants.  This  second  group  of  companies 
do  not  seem  to  have  given  a  good  account  of  themselves 
either  from  a  physical  or  from  a  financial  point  of  view. 
They  are,  in  the  main,  suffering  under  the  financial  burden 
which  must  always  be  borne  by  those  electric  plants  which, 
after  equipping  themselves  for  the  production  of  ciurent, 
scrap  their  central  station  equipment  and  purchase  current 
from  others.^  But  even  those  which  have  never  had  gen- 
erating equipment  seem  to  have  much  less  to  show  for  their 
expenditures  than  have  the  municipal  plants.  To  be  sure, 
a  larger  investment  can  be  expected  in  the  former  because 
their  business  is  two  thirds  greater;  yet  for  this  very  reason 
some  of  the  data  given  make  their  case  so  much  the  worse. 
About  all  that  can  be  said  for  the  companies,  since  they 
appear  to  have  by  far  the  more  favorable  territory  to 
serve,  is  that  their  investment  per  dollar  of  gross  income 
approaches  more  nearly  to  the  figure  shown  by  the  munici- 
pal plants  than  do  any  of  the  other  data  —  and  this,  under 
the  circumstances,  is  no  particular  cause  for  satisfaction. 
Finally,  it  must  be  remembered  that  14  of  this  group  of 

*  It  will  be  remembered  that  only  five  of  the  group.  Harvard,  Ludlow, 
Manchester,  North  Brookfield,  and  WiUiamstown,  began  merely  as  dis- 
tributing i^nts. 


private  plants  are   "controlled"  —  possibly   with  some 
degree  of  success ! 

Just  a  word  should  perhaps  be  said  regarding  the  increase 
in  investment  during  the  year  under  consideration.  It 
appears  that  the  net  additions  to  plant  amounted  for  the 
companies  to  $111,632,  or  about  10  per  cent  of  the  entire 
investment,  and  for  the  municipal  plants  the  net  additions 
were  $42,680,  equal  to  nearly  8  per  cent  of  the  investment. 
Though  the  showing  here  made  is  more  favorable  for  the 
former,  it  hardly  seems  sufficient  to  absolve  them  for  their 
earlier  financial  blunders  or  to  remove  the  effects  of  their 
financial  misfortunes,  if  such  we  choose  to  regard  them. 
On  the  other  hand  this  apparently  healthy  policy  of  exten- 
sion may  indicate  that,  from  the  public  point  of  view,  the 
companies  are  now  endeavoring  to  give  a  quid  pro  qiuh 
However,  when  we  compare  the  total  increase  in  length 
of  lines  during  the  year,  116  miles  for  the  companies  and 
132  miles  for  the  municipal  plants,^  with  the  amount  exi- 
pended  on  new  construction,  $111,632  and  $53,567  re»- 
spectively,  we  find  that  the  cost  per  mile  of  new  line,  since 
most  of  the  increase  legitimately  belongs  here,  is  stiM 
nearly  $1,000  in  the  one  group  and  about  $400  in  the  other. 
The  leopard  does  not  seem  to  have  changed  his  spots! 
There  could  scarcely  be  sufficient  difference  in  the  quality 
of  the  construction  to  justify  the  difference  in  expense. 

The  balance  sheets  show  a  small  surplus  for  each  group, 
$20,000  in  the  case  of  the  companies  and  a  little  more  than 
$30,000  for  the  public  plants.  Only  two  of  the  former 
and  three  of  the  latter  return  a  slight  deficit.  The  com- 
panies have  financed  themselves  to  the  extent  of  two  thirds 
of  their  investment  by  the  issue  of  capital  stock.  The 
municipal  plants,  on  the  other  hand,  have  secured  about 
one  third  of  their  construction  funds  by  means  of  direct 

1  The  new  plants  of  South  Hadley,  Limenburg,  and  Paxton,  account- 
ing for  an  increase  of  136  miles  of  line  in  the  municipal  group,  must  be 
omitted  because  their  lines  were  not  reported  in  1914. 


I 


246 


MUNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


247 


appropriations  from  the  tax  levy;  and  they  have,  by  the 
same  method,  paid  off  a  large  portion  of  their  bonds  and 
notes,  so  that  the  actual  outstanding  indebtedness  is  now 
only  $253,163  —  less  than  one  half  of  their  total  invest- 
ment. 

2.  Operating  Expenses  and  Operatinq  Income  * 

The  operating  efficiency  of  the  group  of  companies,  when 
compared  with  the  public  plants,  is  far  from  what  we  might 
reasonably  expect  in  view  of  their  superiority  in  size.  The 
only  instance  in  which  they  appear  to  be  effecting  any 
considerable  economies  is  in  their  distribution  expenses. 
The  better  showing  here  made  is  due  partially  to  their 
larger  output  of  current,  and  partially,  perhaps,  to  the 
character  of  their  territory.  It  is  also  possible  that  they 
are  not  keeping  their  Hnes  in  as  good  repair  as  are  the  other 
group.  Furthermore,  the  municipal  plants  are  probably 
including  here  labor  costs  which  should  be  charged  to  the 
construction  accounts. 

Many  of  the  other  important  items  of  expense  are  con- 
spicuously higher  for  the  companies  than  for  the  public 
plants,  and  the  difference  is  very  marked  in  the  case  of 
general  office  expenses  (under  which  the  companies  enter 
advertising  expenses,  etc.)  and  general  salaries,  where,  pre- 
sumably, it  should  be  easiest  to  cut  down  the  costs.  If, 
however,  the  taxes  paid  be  deducted,  the  two  groups  are 
put  on  a  reasonably  equal  basis,  so  far  as  the  total  ex- 
penses are  concerned.  Some  additional  items  should  also  be 
charged  against  the  municipal  plants,  for  the  free  services 
which  they  receive  from  town  officials,  or,  instead  of  this, 
we  might  deduct  the  salaries  of  officers  in  the  other  group. 
Free  quarters  in  the  town  hall  are  an  important  item.  It  is 
also  significant  that  only  9  out  of  the  20  public  plants  are 
paying  insurance,  though  the  average  rate  paid  by  the 
group  is  almost  as  high  as  that  paid  by  the  companies. 

*  Appendix,  pp.  468-475. 


Table  43.  Comparative  Expenses  per  K.W.H.  sold 

(Purchasing  Plants) 

Companiet    Muninml  plants 
icenU)  (excluding  Nor- 

wood)   (cenU) 

Total «-318  5890 

Current  purchased 3.577  S.780 

Distribution  (total) 0.821  1.500 

Distribution  wages 0.270  0.4W 

Maintenance  and  repair  of  lines ^^^'^        4il'2?^ 

Per  mile  of  line $lf-20  $16.50 

Per  cent  of  total  investment 1  •"  *•* 

General  salaries 0.376  0.265 

General  office  expenses 0.452  0.194 

Insurance 0.133  0.109 

Taxes 0.410 

Salaries  of  officers u.xitf 

Total  management  and  miscellaneous 1 . 920  0. 700 

Total  —  taxes  deducted 5008  6.980 

Total  —  toxes  and  officers'  salaries  deducted         5 .  769  6 .  980 

Operating  ratio  (street  lighting  out) 90 .  96 . 

Operating  ratio  (taxes  out) 8*-  ***»• 

Total  operating  expenses $203,492       $145,202 

Total  —  taxes  deducted 190,340         ,^^^^ 

Total  —  officers'  salaries  deducted 183,285         145,202 

It  is  surprising  to  find  so  close  a  correspondence  in  the 
unit  income  of  the  two  groups  of  plants.  The  companies 
seem  to  make  up  by  means  of  higher  lighting  rates  the 
concessions  which  they  give  to  their  power  customers.  In 
view  of  the  better  character  of  their  business  and  the  larger 
income  per  customer,  their  rates  are  probably  too  high,  if 
we  accept  as  our  standard  the  municipal  plants,  which  are 
apparently  giving  good  service  at  low  cost,  though  many 
of  their  customers  would  seem  to  be  unprofitable.  It  should 
not  be  forgotten  that  the  former  find  it  necessary  to  be 


11 


4 


248 


MUNICIPAL  ELECTRIC  LIGHTING 

Table  44.  Percentage  Analysis  of  Expenses 
(PuBCHAsiNG  Plants) 


Compamiet 

MunicijxdiHet 

Norwood 

Charader  qf  Expnm 

Amount 
(doUar^) 

Percent 
o/Md 

Amount 

(doUart) 

Percent 
of  total 

Percent 
qf  total 

1.  Operating  expen«M  — 
Cranenl  analysis : 

"At  station" 

Purcbaae  of  current .... 
Distribution 

S6,0&i 

115,l(il 

26,435 

34,825 

7,865 

13,152 

3.0 
5C.G 
13.0 

17.1 
3.9 
6.5 

$1,671 

91,878 
36,371 

12,476 

2,807 

•  ■  •  • 

1.2 
63.3 
25.0 

8.6 
1.9 

•  •  •  • 

0.1 
80.0 
11.2 

7.8 
0.9 

Office  expeuses  and  joan- 
agement 

Mi'H'ftllaneona.... ....   ^ 

Taxes ....* 

•  •  •  * 

Total    

$203,492 
190,3-M) 

•  •  •  • 

•  •  •  • 

?145,203 

•  •  •  • 

100. 

•  •  •  • 

100. 

Xdal—withottt  taxes 

XL  Operating  expenses  — 
Detailed  analysis,  taxeeoat: 
"At  station" 

6,504 

115,161 

8,805 

15,607 

»,023 

12,123 

7,055 

1,074 

•  •  •  • 

14,560 
4.296 
2,246 
1,333 

3.2 

60.6 

4.6 

8.2 

1.1 

6.4 
3.7 
0.6 

•  •  •  • 

7.7 
2.3 
1.2 
0.7 

1,671 
91,878 
10,047 

24,165 

2,159 
6,430 

•  «  •  • 

»  •  •  » 

263 

4,720 

2,639 

683 

648 

1.9 

63w3 
6.9 

16.6 

1.5 
4.4 

•  •  •  • 

•  •  ■  • 

0.2 
3.3 
1.8 
0.5 
0.4 

0.1 

80.0 
3.2 

7.0 

1.8 
5.0 

•  •  •  • 

•  «  >  ■ 

1.2 
1.8 
0.6 

Current  purchased 

Distribution  wages 

Repair  of  lines,  meters, 
etc 

Distribution    tools  and 
equipment 

General  salaries 

Salaries  of  ofBcers 

Dhreetors'  allowances. . . 
Bal^iries  of  monicipal 
lifirht  boards 

General  office  expenses. . 
Insurance 

Rent  of  ofBces 

All  other 

«  .  •  • 

0.S 

m.  Operating  income 

FroUt  and  loss  teoome — 

$287,560 
11,928 

•  «  •  • 
«  •  •  • 

$151,556 
1,031 

•  •  »  • 

•  •  •  • 

•  •  «  • 

•  •  a  • 

Total 

$299,478 

.... 

$153,187 

.... 

•  «  •  • 

Total  charges  afpunst  in- 
come : 
Operating  expenses. .... 
Interest 

$203,492 
24,302 
17,565 

•  •  •  • 

61,657 

&,»1 

67.3 
6.0 
5.8 

•  •  •  • 

17.1 
1.8 

$145,202 

9,345 

16,106 

260 

20,997 

•  •  •  • 

92 

75.6 
4.9 
8.4 
0.2 

10.9 

•  •  •  • 

0.1 

84.6 
8.3 

6.2 

6.9 

Depreciation 

Knkiug  fund  paymenfta. . 
Note  and  bona  paymsnts 
Dividends 

All  othAr.     . 

•  •  •  • 

Total 

$302,367 
2,879 

100. 

•  •  •  • 

$192,022 
38,835 

100. 

•  .  •  • 

100. 

DsAcit 

•  •  •• 

earning  a  fair  return  on  a  much  larger  investment;  but 
this  consideration  should  cause  them  to  effect  greater 
•avings  in  their  operating  expenses. 


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250 


MUNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


251 


,  Table  46.  Comparative  Income  (Purchasing  Plants) 

Municipal  Plnrda 
{excluding 
Companiet  Nortoood) 

A.  Income  per  K.W.H.  (cents) ; 

Total  operating  income 8.928  9.090 

Total  (street  lighting  out) 8.945  9.090 

Total  from  sale  of  current 8.723  9.070 

Total  (street  lighting  out) 8.700  9.070 

Commercial  lighting 12.418  10.387 

Street  Lighting 8.870 

Power 3.754  5.635 

B.  Other  comparisons: 

Net  income $84,069 

per  K.W.H.  sold  (cents) 2.610 

Net  income  (street  lighting  out) $24,038           $6,353 

per  K.W.H.  sold  (cents) 0. 946            0. 380 

Number  of  lighting  customers 6,961  5,718 

Number  of  power  customers 305  309 

Income  per  lighting  customer $30 .  40  $23 .  25 

Income  per  power  customer $123 .  10  $40 .  80 

Income  per  kilowatt  connected  load: 

Light $33.60  $23.60 

Power $16.20         $14.50 

Total  operating  income $287,560       $151,556 

Total  mcome  (street  lighting  out) .  $227,529       $151,556 
Profit  and  loss  income 11,918  1,631 

3.  Disposal  of  Net  Income:  Comparisons  * 

Nine  of  the  municipal  plants  suffered  some  loss  in  oper- 
ation, while  the  net  gain  for  the  group  was  a  little  more  than 
$6,000.  Of  the  private  plants,  if  the  street  lighting  income 
were  to  be  omitted,  6  would  have  been  operated  at  a  loss. 

The  amount  of  depreciation  written  off  during  the  year 
is  not  far  apart  in  the  two  cases,  0.601  cents  per  kilowatt 
hour  in  the  municipal  plants  and  0.545  cents  in  the  com- 
panies, though  7  of  them  did  not  make  any  allowance 
for  this  item.  Judged  by  the  ratio  which  the  amount  of 
depreciation  bears  to  the  total  investment  the  rate  allowed 

*  Appendix,  pp.  470-477. 


by  the  latter  would  appear  to  be  too  small.  Since,  how- 
ever, it  is  probable  that  in  many  instances  a  good  portion 
of  their  property  has  been  "junked,"  they  are  not  Hable 
to  serious  criticism.  The  assessed  valuation,  it  must  be 
remembered,  is  Httle  more  than  half  the  "total  invest- 
ment" as  we  have  taken  it. 

The  dividends  declared  amounted  to  more  than  $50,000, 
7.4  per  cent  on  the  capital  stock,  and  4.7  per  cent  on  the 
investment,  swollen  though  it  be.^  After  all  charges  were 
met,  there  was  a  deficit  for  the  year  of  about  $3,000. 

Had  the  companies  given  free  street  lighting  service, 
and  had  they  not  paid  taxes,  they  would  have  had  at  the 
end  of  the  year  a  net  income  of  nearly  $40,000,  about 
half  of  which  would  be  accounted  for  by  the  company  of 
Manchester.  This  sum  would  be  just  enough  to  meet  the 
depreciation  and  interest  charges.  The  mimicipal  plants, 
on  the  other  hand,  can  show  an  operating  surplus  of  only 
$6,000.  Other  comparisons  might  be  made,  though  it 
appears  that  the  financial  advantage  in  operation  of  the 
private  plants  is  accounted  for  chiefly  by  their  larger  busi- 
ness. Their  total  income  exceeds  that  of  the  other  group 
by  an  amount  proportionately  equal  to  the  difference  in 
quantity  of  current  sold. 

4.  The  Cost  of  Street  Lighting  ^ 

An  attempt  has  been  made  to  compute  the  cost  of  street 
lighting  by  a  method  similar  to  that  employed  in  the  pre- 
ceding chapter,  of  which  no  further  explanation  need  here 
be  given.  It  is  evident  that,  if  we  consider  only  the  actual 
outlays  during  the  year  resulting  from  public  ownership, 
allowing  for  the  taxes  lost  at  the  same  rate  paid  by  the 
companies,  there  has  been  an  aggregate  saving  of  about 
$16,100,  or  less  than  3  per  cent  on  the  investment.   If,  in 

1  Three  of  them.  Harvard,  Ludlow,  and  Sunderland,  did  not  earn 
enough  to  pay  dividends. 
*  Appendix,  p.  478. 


I 


h 


I 


fM  MUNICIPAL  ELECTRIC  LIGHTING 

addition  the  appropriations  from  the  tax  levy  for  new 
construction  were  to  be  counted,  this  apparent  gain  would 
be  more  than  offset. 

Table  47.  Cost  of  Street  Lighting  to  the  Towns 

OWNING  THEIB  DISTRIBUTING  SySTEM 

I         Net  income  from  operation $6,353 

Other  income 1,631 

Total $7,984 

Charges  against  income: 

Depreciation $16,106 

Interest  paid 9,345 

Taxes  lost  (estimated  at  0.41  cents  per  K.W.H.  de- 
livered)    9,963 

Other  items 92 

Debt  payments 23,777 

Total $59,283 

Deficit 51,299 

Number  of  K.W.H.  used  for  street  lighting 760,923 

Cost  per  K.W.H.  (cents). 6.750 

Rate  chared  by  companies 8 .  870 

Apparent  saving  per  K.W.H.  (cents) 2. 120 

Equivalent  to  (about) $16,100 

11.  A.  Available  income  from  all  sources $7,984 

Charges  against  income: 

Depreciation $16,106 

Interest  on  entire  investment  @  4% 23,180 

Taxes  lost 9,963 

Other  items 92 

Total $49,341 

Deficit 41,357 

Apparent  cost  of  street  lighting  per  K.W.H 6 .  435 

Apparent  saving  per  K.W.H 3.435 

Equivalent  to  (about) $26,100 

B.  Commercial  lightmg  rate  of  companies  (cents  per  K.W.H.)  12 .  418 

Commercial  lighting  rate  of  public  plants 10.387 

Apparent  gain  under  municipal  ownership  (cents  per 

K.W.H.)... 2.031 

Number  of  kilowatt  hours  used  for  commercial  and 

domestic  lighting  in  municipalities  owning  plants.  .1,279,932 

Aggregate  saving $26,000 

Making  an  apparent  total  gain  of $52,100 

and  actual  (.')  cost  of  street  lighting $15,250 

Equivalent  to  a  rate  per  K.W.H.  (cents) 2 .  000 

A  saving  per  K.W.H.of  (cents) 6.870 


IN  MASSACHUSETTS 


25S 


According  to  the  other  method,  when  interest  is  com- 
puted upon  the  entire  investment  and  maturing  debt 
payments  are  omitted,  the  cost  would  seem  to  be  some- 
what lower,  about  5.435  cents  per  kilowatt  hour  instead 
of  8.870  as  in  the  companies,  and  the  advantage  arising 
under  public  operation  might  be  said  to  be  about  $26,100, 
somewhat  more  than  4  per  cent  on  the  plant  cost.  Most 
of  this  surplus  would  be  absorbed,  were  we  to  give  due 
consideration  to  the  free  services  of  various  kinds  ren- 
dered by  the  towns,  as  well  as  the  lower  interest  rates 
which  result  from  the  credit  of  the  municipality.*  These 
advantages,  however,  should,  and  probably  have  resulted 
in  lower  charges  for  commercial  service  than  might  other- 
wise have  been  secured.  Hence,  as  indicated  in  the  table 
(47,  II,  B)  these  municipalities  seem  to  be  getting  their 
street  lighting  at  a  very  low  rate  indeed. 

From  the  foregoing  brief  analysis,  so  far  as  the  statis- 
tics can  show,  it  appears  that  this  group  of  Kttle  pubhc 
plants  have  been  operated  with  a  considerable  degree  of 
effectiveness.  Though  they  have  just  about  broken  even 
financially,  they  have  certainly  justified  their  existence 
by  giving  comparatively  low  commercial  lighting  rates. 
Supported  by  the  hearty  cooperation  of  the  communities 
in  which  they  are  located,  assisted  at  all  times  by  the 
Commissioners,  they  have  been  able  to  render  their  con- 
sumers at  a  reasonable  rate  that  service  for  which  private 
enterprise  would  probably  have  expected  a  much  more 
Hberal  reward.  Dependent  on  private  enterprise  for  the 
solution  of  the  more  technical  problems  connected  with 
the  generation  of  current,  they  have  been  able,  at  a  merely 
nominal  outlay,  to  find  public  spirited  citizens  who  are 
willing  to  devote  a  large  part  of  their  time  to  "managing" 
the  municipal  plants,  and  doing  a  little  of  every  kind  of 
work  for  which  private  concerns  would  have  to  pay  dearly. 

^  The  average  rate  paid  by  the  small  public  plants  is  close  to  4  per 
cent,  while  thb  group  of  con^^nies  pay  usually  5.5  per  cent. 


254 


MUNICIPAL  ELECTRIC  LIGHTING 


Addendum:  Perhaps  it  should  be  suggested  in  this  con- 
nection that,  after  having  studied  the  local  situation  with 
some  care,  the  writer  feels  that  the  preceding  statistical 
analyses  may  in  some  ways  tend  to  be  misleading  in 
regard  to  this  group  of  municipal  plants  J  In  the  first 
place,  the  investment  in  useless  equipment,  amounting  to 
something  less  than  $200,000  as  nearly  as  can  be  esti- 
mated, should  be  deducted  from  the  total  investment  of 
the  companies  in  order  to  put  them  on  a  reasonably  com- 
parable basis  with  the  public  plants  in  so  far  as  present- 
day  financial  efficiency  is  concerned.  This  would  reduce 
all  of  their  investment  data  by  more  than  20  per  cent.^ 
Accordingly,  we  find  that,  with  this  adjustment,  the  in- 
vestment per  kilowatt  hour  delivered  is  only  22  cents  for 
the  private  plants,  instead  of  30  cents.  Also,  the  invest- 
ment per  dollar  of  operating  income,  street  lighting  ex- 
cluded, becomes  only  $3.10  in  the  companies  as  contrasted 
with  $3.90  in  the  other  group.  And  the  average  invest- 
ment per  plant,  then,  is  by  no  means  out  of  line  with  the 
relatively  greater  amount  of  current  sold. 

Again,  not  only  do  a  large  proportion  of  the  municipal 
plants  own  no  real  estate  or  buildings  of  any  kind,  as  pre- 
viously stated,  but  also  as  the  current  is  metered  at  the 
town  line  and  frequently  transformed  by  the  seUing  com- 
pany, they  are  saved  the  expense  of  large  transformers 
and  transformer  sheds,  etc.  Their  investment  is  in  Hues 
alone,  while  the  companies  naturally  have  a  good  deal 
of  money  in  land  and  buildings. 

In  a  number  of  cases,  also,  the  line  construction  of  the 
smaller  municipal  plants  is  reported  to  be  below  the 
standard  which  is  common  with  the  other  group.  This 
fact  may  partially  explain  the  much  higher  cost  of  recent 
extensions  per  mile  of  line  in  the  private  plants. 

Finally,  it  has  been  found  that,  in  many  instances,  when 
extensions  are  made,  the  cost  of  labor  and  superintendence 
1  Cf.  ch.  xm,  infra.  ^  *  Manchester  omitted. 


IN  MASSACHUSETTS 


255 


which  is  properly  chargeable  to  the  construction  account 
has  in  the  municipal  plants  been  treated  as  an  operating 
expense.  Though  every  influence  is  exerted  to  keep  the 
capital  accounts  low  in  the  public  plants,  the  tendency  is 
wholly  in  the  opposite  direction  in  the  private  plants,  for 
reasons  which  it  seems  scarcely  necessary  to  comment 
upon.  Hence,  this  policy  has  operated  to  make  the  com- 
parative investment  much  lower  in  the  former  than  in  the 
latter. 

If  all  of  the  foregoing  factors  could  be  properly  evalu- 
ated, it  is  probable  that  the  disparity  between  the  two 
groups  would  not  be  so  noticeable,  though  the  companies 
would  still  be  under  a  disadvantage.  And,  so  far  as  the 
operating  expenses  are  concerned,  it  must  also  be  recalled 
that  practically  all  of  the  public  plants  are  so  new  that 
there  has  been  very  little  replacement  or  renewal  of  the  dis- 
tributing system  needed,  while  the  cost  of  upkeep  has  been 
almost  nil.  In  a  few  years  the  turning  point  will  come 
when  we  can  look  for  a  greatly  increased  unit  cost  of  oper- 
ation, in  spite  of  the  fact  that  practically  nothing  is  being 
paid  for  management. 

Summary 

The  results  of  our  study  of  the  financial  conditions  of 
these  two  groups  of  purchasing  plants  may  be  briefly 
stated  as  follows: 

1.  There  appears  to  be  far  greater  economy  in  invest- 
ment in  the  municipal  plants  than  in  the  companies.  In 
this  connection,  however,  we  must  remember  (a)  that  the 
latter,  having  for  the  most  part  formerly  generated  cur- 
rent, have  an  unavoidably  large  investment  in  "dead 
assets."  Also  (6)  the  tendency  of  these  small  public 
plants  is  to  keep  the  apparent  investment  account  low, 
and  to  include  in  operating  expenses  what  is  reaUy  a 
capital  charge. 

2.  The  companies  seem  to  have  an  unnecessarily  high 


C56 


MUNICIPAL  ELECTRIC  UGHTING 


unit  cost  of  operation,  as  compared  with  the  other  group; 
but  the  municipal  plants  receive  a  good  deal  of  unpaid 
or  under-ps.\d  service,  and  on  account  of  their  recent 
installation  the  cost  of  upkeep  is  at  a  minimum. 

3.  Though  the  public  plants  appear  to  have  the  less 
desirable  territory  to  serve,  their  average  income  per  kilo- 
watt hour  sold  is  practically  the  same  as  that  of  the  com- 
panies. The  lighting  rates  of  the  former  are  lower  (about 
10  per  cent),  while  their  power  rates  average  very  much 
higher  (50  per  cent)  than  the  corresponding  rates  of  the 
private  plants. 

4.  This  group  of  municipal  plants,  with  the  exception  of 
Norwood,  does  not  seem  to  have  made  any  direct  financial 
gains.  However,  there  is  little  question  that  the  rates 
charged  are  in  general  lower  than  those  which  would  have 
been  charged  by  private  plants,  had  they  been  in  the  field. 
WTiether  this  will  continue  to  be  the  case,  after  the  "season- 
ing" period  is  passed,  is  an  open  question. 

5.  The  pubUc  plant  of  Norwood,  during  the  year  1914- 
15  at  any  rate,  made  a  better  financial  showing  than 
any  other  mimicipal  plant  of  either  group.  It  appears 
not  only  to  have  given  the  town  absolutely  free  street  light- 
ing, but  also,  in  addition,  to  have  made  a  little  money 
in  operation  ($^5)y  after  all  possible  charges  have  been 
allowed  for.  It  must  be  recalled,  however,  th&t  the  local 
conditions  and  the  business  are  unusually  favorable. 


CHAPTER  IX 

MISCELLANEOUS  CONSIDERATIONS 

1.  Labor  and  Wages  * 

Having  examined  at  some  length  those  aspects  of  our 
subject  which  can  be  most  readily  measured  in  terms  of 
physical  units,  we  must  devote  brief  attention  to  several 
other  considerations,  more  diflScult  to  evaluate,  but  none 
the  less  highly  significant.  Many  students  of  the  problems 
of  municipal  ownership  are  particularly  concerned  about 
the  questions  which  relate  to  the  employment  of  labor. 
Frequent  assertions  are  made  to  the  effect  that  pubHc  labor 
is  less  eflScient  than  private  labor,  not  to  mention  the  possi- 
bilities for  political  corruption.  Accordingly,  before  dis- 
cussing the  information  secured  in  the  local  survey,  it  will 
be  of  interest  at  this  point  to  attempt  a  few  comparisons 
of  the  conditions  which  are  indicated  from  our  study  of 
the  returns  of  the  two  groups  of  plants. 

In  no  respect  are  the  accounts  prescribed  by  the  Board 
less  satisfactory  for  our  purposes  than  in  the  data  which 
they  require  regarding  employees  and  wages.  WTiile  the 
"average  number  of  employees"  for  the  year  —  whatever 
the  "average"  may  be  — is  given  by  both  groups,  only 
the  public  plants  are  compelled  to  return  the  wages  which 
they  pay.  For  the  companies,  however,  the  salaries  of 
officials  are  given,  and  it  is  possible  in  a  very  crude  sort  of 
way  to  estimate,  in  part,  the  average  wages  per  employee, 
by  comparing  the  number  reported  with  the  outlays  for 
wages  appearing  under  the  different  heads  "wages  at 
stations,"  "distribution  wages,"  and  "general  salaries." 
But  there  is  constant  overlapping,  and,  particularly  in  the 

1  Appendix,  p.  158. 


258 


MUNICIPAL  ELECTRIC  LIGHTING 


case  of  the  linemen,  no  accurate  data  can  be  secured,  for 
costs  of  material  and  labor  are  lumped  together  in  the  item 
"repairs  and  renewals  of  lines,  etc." 

Other  difficulties,  however,  present  themselves  because  of 
the  lack  of  consistency  and  uniformity  in  the  methods  which 
are  followed  in  determining  the  average  number  of  em- 
ployees. In  many  cases  no  line  is  drawn  between  regulariy 
employed  labor  and  occasional  labor,  or  between  full- 
time  and  part-time  employees.  Nor  does  any  clear  dis- 
tinction seem  to  be  made  between  labor  which  is  used  on 
new  construction,  the  wages  of  which  would  be  charged 
to  the  capital  account,  and  labor  which  is  employed  in  the 
operation  of  plant.  The  growing  policy  of  "jobbing"  cer- 
tain portions  of  the  work,  —  even  in  the  case  of  repairs,  — 
which  is  found  in  some  of  the  larger  companies,  also  tends 
to  obscure  the  relations  which  exist  between  the  number 
of  employees  and  the  operating  labor  costs. 

Again,  in  many  cases,  wages  are  returned  under  a  cer- 
tain head,  with  no  report  of  a  corresponding  number  of 
employees;  while  frequently  a  number  of  employees  are 
listed,  though  no  wages  appear  for  them  in  the  operating 
accounts.  Some  plants,  both  public  and  private,  which  are 
doing  a  large  business,  report  no  clerks  or  bookkeepers 
whatever.  On  the  other  hand,  one  small  purchasing  plant 
boasts  of  one  clerk  at  the  local  office  and  tvx)  additional 
clerks  in  Boston !  The  municipal  plants  frequently  report 
none  of  their  female  employees,  because  the  return  form 
literally  calls  for  the  number  of  men  employed !  Such  are 
some  of  the  puzzling  problems  which  present  themselves. 

However,  after  having  checked  up  the  returns  with  great 
care,  the  writer  finds  that,  while  there  are  numerous 
additions  and  omissions  in  each  group,  the  generating  com- 
panies in  the  aggregate  returned  about  6  per  cent  too 
many  employees,  even  though  we  include  among  the  list 
those  officers  of  corporations  who  really  do  some  work 
and  whose  salaries  are  partially  distributed  under  other 


IN  MASSACHUSETTS 


heads  than  "salaries  of  officers."  Hence  the  total  number, 
corrected,  excluding  those  officers  who  do  not  appear  to  be 
directly  connected  with  the  actual  of>eration  of  the  busi- 
ness, is  295  (17.4  per  plant),  instead  of  313  as  reported  to 
the  Board.  The  corresponding  public  plants,  on  the  con- 
trary, appear  to  have  reported  about  4  per  cent  too  few 
employees,  so  that  their  corrected  number,  including  the 
managers,  is  about  240  (14.1  per  plant)  instead  of  230. 
Since  the  possibility  of  error  in  1910  would  in  both  cases 
probably  be  about  the  same  as  in  1915,  the  uncorrected 
figures  will  be  used  in  making  comparisons  with  that  year. 

It  appears  that  the  total  number  of  employees  has 
increased  just  twice  as  rapidly  for  the  companies  as  for 
the  mimicipal  plants,  though  the  figures  were  close  to- 
gether in  1910.  The  close  correspondence  at  the  earlier 
date,  waiving  the  possibility  of  inaccurate  returns,  was 
probably  in  large  measure  due  to  the  fact  that,  though 
their  actual  business  was  considerably  greater  than  that 
of  the  other  group,  their  distributing  system  was  not  pro- 
portionately so  extensive.  And,  so  far  as  the  number  of 
employees  at  station  is  concerned,  the  difference  in  size 
here  found  does  not  appear  to  be  particularly  significant. 
(This,  by  the  way,  is  very  obvious  in  the  1915  figures,  for 
the  total  number  of  station  employees  in  the  two  groups 
is  respectively  110  and  103.)  Furthermore,  the  pubUc 
plants  in  1910  seem  to  have  been  just  completing  one  of 
the  stages  of  their  growth,  whereas  the  companies,  for  the 
most  part,  appear  to  have  been  entering  upon  a  period  of 
rapid  expansion. 

The  marked  increase  shown  by  the  companies  during 
this  period  has  not  been  incommensurate  with  the  growth 
of  their  business  and  the  extent  of  their  fines.  The  rapid 
development  of  their  distribution  system,  their  increased 
commercial  lighting  service,  and  their  evident  efforts  to 
serve  all  of  the  public,  have  naturally  necessitated  the  use 
of  a  proportionately  larger  force  of  employees.    Yet  they 


'% 


260 


MUNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


261 


are  probably  somewhat  "over-staffed"  at  present;  while 
the  municipal  plants,  though  they  would  not  be  expected 
to  increase  the  number  of  their  labor  force  as  rapidly  as 
their  business,  are  doubtless  getting  on  with  as  few  em- 
ployees as  possible,  depending  in  many  instances  upon  the 
practice  of  hiring  "extra  help  as  required."  However  this 
may  be,  it  is  gratifying  to  find  that  there  is  no  evidence 
of  "making  work**  for  municipal  employees,  if  we  may 
take  as  our  criterion  the  condition  found  in  the  group  of 
companies. 

Table  48.  Comparative  Efficiency  of  Labor 


1910 

1916 

Percent 

increase 

Com- 
pany 

Munici- 
pal^ 

Com- 
pany 

Muni-ei- 
pali 

Com- 
pany 

Munici- 
pal 

I.  Generating  plants : 

Total  number  of  employees 

Corrected  for  1915 

Number  of  salaried  ofB- 

194 

•  •  •  • 

179 

•  •  •  • 

313 
296 

230 
240 

61.4 

•  •  •  • 

30.0 

•  •  •  • 

oen. •• 

•  •  •  • 

•  «  •  • 

33 

•  •  •  ■ 

«  •  •  • 

•  •  •  • 

Number  K.W.H.  delivered 

74,616 

•  •  •  • 

•  •  •  • 

49,071 

•  •  •  • 

•  *  •  • 

78,077 
82,008 
74,600 

65,044 
62,409 

•  •  •  • 

4.6 

•  •  *  • 

•  •  •  • 

31.1 

Corrected  for  1915 

Including  salaried  officers 

•  •  •  • 

•  •  •  • 

Operating  income  per  em- 
ployee, excluding  street 
Hffhtinir  

$3,904 

•  •  ■  • 

•  •  •  • 

$2,477 

•  •  •  • 

•  •  •  • 

$3,682 
S3,868 
$3,614 

$2,915 
$2,800 

•  •  •  « 

-5.7 

•  •  •  • 

+17.1 

Corrected  for  1916 

Including  salaried  officers 

■  •  •  • 
•  •  «  • 

Net  income  per  employee, 
excludintr  street  lighting . 

Corrected  for  1915 

Including  salaried  officers 

1600 

•  •  •  • 

•  •  «  • 

1320 

•  •  •  • 

•  •  •  • 

$894 
9948 
$853 

$474 
$456 

•  •  •  • 

•  •  •  • 

•  •  •  • 

•  •  •  • 

•  ••■ 

•  •  •  • 

•  •  •  • 

n.  Purchasing  plants : 

Total  number  of  employees 
Corrected  for  1915 

•  •  •  • 

•  •  •  • 

•  •  •  • 

•  •  •  • 

58 
52 

46 

■  •  •  • 

•  •  •  • 

•  •  •  • 

•  •  •  « 

•  •  ■  • 

Number  K.W.H.  delivered 

per  employee 

Corrected  for  1915 

•  •  •  • 

•  •  •  • 

•  •  •  • 
■  •  •  • 

55,536 
(02,000) 

62,788 

•  •  •  • 

•  ■  •  • 

•  •  •  • 

•  •  •  • 

Operntiog  income  per  em- 
ployee, excluding  street 
lighting  

•  •  •  • 

•  •  •  • 

•  ■  •  ■ 

$3,920 
(4,370) 

$3,280 

•  •  •  • 

a  •  •  » 

Ctxrected  for  1915 

•  •   ■  • 

Net  income  p«r  employee, 
excluding:  street  ligliting. . 
Corrected  for  1915 

•  •  •  ■ 

•  •  •  • 

•  •  •  • 

$344 
(384) 

140 

•  •  »  • 

■  •  •  • 

•  «   •  • 

•  •  •  • 

>  Holyoke  and  Nonvood  omitted  throughout  on  account  of  thoir  sixe. 


When,  however,  we  compare  the  sales  and  income  per 
employee  at  both  dates,  we  find  the  companies  far  in  the 
lead,  after  street  fighting  sales  have  been  deducted,  even 
though  the  salaried  officials  be  included.   But,  obviously, 
they  should  not  be  counted  if  we  are  trying  to  put  the 
plants  on  a  comparable  basis  from  the  point  of  view  of 
operating  efficiency  —  unless,  of  course,  we  wish  to  regard 
as  employees  of  the  public  plants  a  number  of  town  offi- 
cials together  with  the  members  of  the  municipal  fight 
boards.  Yet  it  appears  that  while  the  income  per  employee 
of  the  pubfic  plants  has  increased  to  an  appreciable  ex- 
tent, that  of  the  companies  has  actually  been  subject  to  a 
slight  decrease.  While  this  state  of  affairs  speaks  well  for 
the  former,  yet  in  view  of  what  we  have  previously  dis- 
covered regarding  the  physical  and  developmental  fea- 
tures of  the  two  groups,  the  showing  here  made  affords 

no  cause  for  elation. 

The  amount  of  current  delivered  per  employee  has  in- 
creased in  both  groups,  but  far  more  rapidly  in  the  public 
plants,  as  they  have  been  growing  up  to  their  eariier  equip- 
ment and  labor  force.  The  growth  in  amount  of  net  in- 
come per  employee,  when  street  lighting  income  is  efimi- 
nated,  has  been  at  an  equal  rate  (50  per  cent)  for  both. 
And  probably  the  net  mcome,  which  is  twice  as  great  in 
the  companies,  is  the  most  significant  consideration  from 
the  point  of  view  of  those  who  are  in  the  business. 

Mere  size,  in  the  aggregate,  plays  some  part  in  causing 
the  differences  which  have  been  observed,  and  the  influ- 
ence of  this  element  was  particularly  noticeable  in  1910. 
The  number  of  employees  should  not  by  any  means  or- 
dinarily increase  fari  passu  with  the  growth  in  quantity 
of  current  sold,  other  conditions  remaining  equal.  But, 
in  this  particular,  as  in  others,  the  development  seems  to 
come  by  stages,  rather  than  according  to  any  fixed  law. 
Finally,  viewed  from  all  angles,  we  find  a  higher  labor 
efficiency  in  the  purchasing  companies  than  in  the  similar 


262 


MUNICIPAL  ELECTRIC  LIGHTING 


municipal  plants,  and  the  advantage  is  almost  as  marked 
as  in  the  other  group. 

As  a  result  of  the  numerous  difficulties  which  have  been 
suggested,  it  has  been  no  small  task  to  put  the  wage  data 
on  a  comparable  basis.  ^   However,  by  a  process  of  inter- 

Table  49.  Relatfve  Wages 


Employee* 


XL 


Generatinj?  plants : 

Total  number  employees 
on  pay-roll  (linemen  ex- 
cluded, officers  included) 

Number  of  salaried  officers 

Number  of  municipal  man- 
agers  

Total  (excluding  officers) . . 

Total  (excluding  municipal 
managers) 

Employees  at  station 

Employees  other  than  at 
station  or  linemen  — 
mostly  clerks,  etc.  (muni- 
cipal managers  included) 

Ditto  (excluding  munici- 
pal managers) 

Lmemen  (municipal) 

PDTcliasing  plants : 

Total  number  of  employees 
(linemen  excluded,  offi- 
cers included) 

Number  of  salaried  officers 

Number  of  municipal  man- 
agers  

Total  (excluding  officers).. 

Total  (excluding  municipal 
managers 


Number 


Com- 
panie* 


234 
33 


201 

201 
110 


91 
91 


59 
19 


40 


Munici 
pali 


Total  amount 

of  wages 
and  talariet 


165 


17 

1G5 

148 
103 


62 
45 


80 


20 
30 

10 


Com- 
paniet 


$231,230 
48,201 


183,030 

183,030 
114,590 


68,440 
68,440 


27,983 
7,065 


20,928 


Averagf  waget 
or  salaries 


Munici 
pal 


$161,554 


28,600 
161,554 

132,951 
109,048 


62,506 
23,906 


16,477 


11,099 
16,477 

5,378 


Com-     Munici- 
panics      pal  i 


$988 
1,461 


911 

911 
1,042 


752 
752 


474 
371 


G23 


$979 


1,682 
979 

898 
1,059 


847 

531 
(928) 


B49 


665 

649 

638 


1  Holyoke  and  Norwood  omitted  from  the  public  pUnta. 

pretation  and  elimination  it  has  been  possible  to  arrive 
at  an  approximation  of  the  truth.  When  linemen  and 
repair  men  of  all  kinds  are  deducted,  the  wages  of  the  re- 
maining  employee,  particularly  in   the  generating  com- 

*  On  account  o(  the  rapid  and  highly  irregular  changes  taking  place 
since  the  outbreak  of  the  war,  the  wage  data  secured  through  the  local 
survey  are  not  of  much  value.  Hence  no  attempt  is  made  to  use  them 
kere. 


IN  MASSACHUSETTS 


263 


panies,  will  be  found  almost  wholly  in  the  items  of  "sta- 
tion wages,"  "distribution  wages,"  and  "general  salaries" 
(plus  salaries  of  officers  in  the  case  of  the  companies). 
While  there  will  be  a  good  deal  of  overlapping,  especially 
in  the  smaller  plants  where  one  or  two  men  do  all  of  the 
work,  the  condition  will  probably  be  about  the  same  in 
each  group.  It  is  also  possible  to  find  out  exactly  (so  far 
as  the  returns  are  concerned)  the  number  of  men  em- 
ployed at  the  station  itself  as  firemen,  engineers,  oilers, 
tenders,  and  the  like.  Having  reached  this  point,  we  can 
determine,  though  with  a  much  less  degree  of  axjcuracy, 
the  wages  of  the  "soft-handed"  laborers,  the  so-called 
"salaried  "  employees.* 

*  The  writer  has  secured  some  data  from  the  Bureau  of  the  Census 
at  Washington,  which  have  never  been  published,  but  which  appear  so 
untrustworthy  in  certain  respects  that  they  have  not  been  used  in  this 
connection.  The  averages  which  have  been  worked  out  from  these  data, 
are,  however,  appended  in  the  following  table: 

Table  50.  Comparative  Wages  for  all  Plants  in  Massachttsbtts 


Item 


Number  of  statioDs. . 


1902 


Com- 
paniei 


All  employees 

Average  income. 


Officers  of  corporationa.. 
Average  salary 


Salaried  employees 

Average  salary 

Average  salary  (including  offi- 


cers) 


Wage-earners.... 
Average  wages. 


97 

1,894 
«793 

112 
$1,276 

308 

$992 

$1,067 

1,474 
$715 


Muni- 
cipal 


17 

130 
$671 


39 
$590 


91 
$706 


1907 


Com- 
panies 


96 

2,448 

$844 

122 
$1,562 

473 
$1,003 

$1,091 

1,853 
$766 


Muni- 
cipal 


24 

224 

$756 


60 
$671 


164 

$787 


1912 


Com- 
panies 


87 

3,630 
$760 

148 
$1,614 

759 
$670 

$976 

2,723 
675 


Muni- 
cipal 


90 

324 

$796 


85 

$714 


239 

$826 


The  apparent  decrease  in  average  wages  paid  by  the  companies  since 
1907  seems  hardly  consistent  with  the  facts.  Probably  the  discrepancy 
is  due  partially  to  the  different  methods  followed  in  reporting  the  aver- 
age number  of  employees  at  the  different  dates.  (In  1912  the  number 
actually  on  the  pay-roll  on  September  16th  was  called  for,  while  only  the 


264 


MUNICIPAL  ELECTRIC  LIGHTING 


It  accordingly  appears,  from  the  accompanying  table, 
that  the  station  wages,  of  which  we  are  practically  cer- 
tain, are  surprisingly  close  together  in  the  two  groups. 
The  total  wages  paid  per  employee,  when  the  officers  of 
corporations  are  excluded,  are  somewhat  higher  in  the 
public  plants,  though  otherwise  they  are  not  far  apart. 
Also,  the  wages  for  other  than  station  labor  are  consid- 
erably higher  than  in  the  companies.  If  the  municipal 
managers  be  eHminated,  the  salary  of  the  remaining 
group,  mostly  clerks  and  helpers,  is  ridiculously  low,  — 
from  which  we  would  infer  that  a  number  are  on  part- 
time  employment.  No  such  separation  can  be  made  for 
the  companies,  though  the  conditions  are  doubtless  about 
the  same,  unless,  as  is  scarcely  probable,  in  view  of  the 
services  rendered  by  the  salaried  officials  the  wages  of 
managers  and  superintendents  happen  to  be  cut  down. 

The  figures  for  the  purchasing  plants  suggest  some 
rather  surprising  conditions,  for  it  appears  that  the  re- 
ported number  of  employees,  divided  mto  the  returned 
amount  of  wages  paid,  would  give  each  one  less  than  a 
living  wage.  There  is  little  to  choose  between  the  two 
groups,  however,  and  the  seemingly  low  wages  are  caused 
by  the  fact  that  most  of  the  labor  is  employed  on  a  part- 
time  schedule.  Of  the  municipal  plants,  nine  report  no 
regular  employees,  aside  from  the  manager,  and  of  the 
managers  themselves,  two  receive  no  salary. 

average  for  the  year  was  given  at  the  earlier  dates.)  It  is  noticeable  that 
the  average  income  of  the  so-called  "salaried"  employees  in  the  munici- 
pal plants,  including  the  managers,  is  not  only  much  lower  than  the  aver- 
age salaries  paid  by  the  companies,  but  is  also  far  below  the  average 
wages  paid  to  the  "hard-handed"  employees.  This  would  indicate  that 
managerial  wages  were  small,  indeed,  in  the  earlier  days,  since  about 
two  fifths  of  those  on  salary  at  the  various  dates  were  managers  of  muni- 
cipal lighting.  The  wages  reported  by  the  companies,  however,  are  in 
1912  much  lower  than  those  paid  by  the  public  plants  —  a  condition 
which  does  not  now  seem  to  exist.  There  is  little  doubt  that  many  part- 
time  workers  have  been  included,  though  it  is  not  evident  why  this  error 
should  have  been  greater  in  the  one  group  than  in  the  other,  unless  be- 
cause of  the  higher  number  of  workers  employed  by  the  private  plants. 


IN  MASSACHUSETTS 


265 


As  to  the  general  aspects  of  the  labor  problem  in  so  far 
as  it  relates  to  oiu-  study  of  the  electric  lighting  industry, 
it  is  not  possible  to  draw  definite  conclusions.  Probably, 
however,  as  a  result  of  some  of  the  recent  labor  legisla- 
tion, the  municipal  employees  may  have  some  advantage 
over  the  laborers  employed  by  the  companies.  Many 
of  them  have  the  eight-hour  day,^  two  weeks'  vacation 
annually,*  and  a  half-holiday  on  Saturdays.'  The  Work- 

Table  51.  Adoption  op  Labor  Legislation 
(Close  of  1916) 


Adion  of  the  munieivalitiet  stttdied 

MtmicipaliHet  otming 
pLnia  (39) 

Municipalities  served  bg 
companies  (33) 

regarding  recent  labor  legislation 

Nvmber  tak- 
ing adion 

Per  cent 
qftotal 

Number  tak- 
ing adion 

Percent 
qftotai 

I.  Workmen's    Compensation 

(Mans.,  1913,  ch.  807). 

Accepted 

33 
6 

28 
11 

18 
21 

24 
15 

24 

15 

85 
15 

72 
28 

46 
34 

62 
38 

62 
38 

31 

2 

25 

8 

22 
11 

25 

8 

24 

9 

94 

Rejected  or  no  report . . . 
IT.  Pensions     for    employees 
(Mass.,  1912,  oh.  503) 
Accepted 

6 
76 

Reiected 

24 

III.  Eight-hour  day  (Mass.,  1909, 

ch.  514,  sect.  42,  and 
Mass.,  1911,  ch.  494) 

Accepted 

Rejected  or  no  report . . . 

IV.  Vacation     for      employees 

(Mass..  1914,  ch.  217) 
Accepted 

67 
33 

76 

Rejected 

24 

V.  Saturday    half-holiday 

(Mass.,  1914,  oh.  688) 
Accented 

73 

Rejected  or  no  report. . . 

27 

man's  Compensation  Act  has  been  generally  adopted  by 
the  municipalities  studied,*  while  a  large  proportion  are 

1  Mass.,  1909,  ch.  514,  sec  42,  and  1911,  ch.  494. 

«  Mass.,  1914,  ch.  217. 

»  Mass.,  1914,  ch.  688.  *  Mass.,  1913,  ch.  807, 


266 


MUNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


267 


providing  for  pensions  to  their  employees.*  Private  labor 
does  not  have  all  of  these  advantages,  and  sometimes 
longer  hours  are  worked,  as  there  is  little  if  any  unioniza- 
tion among  the  workers  in  this  industry  in  the  smaller 
places  which  have  been  investigated.^ 

It  is  interesting  to  note  in  this  connection  the  appar- 
ent effects  of  municipal  ownership  upon  the  adoption  of 
the  progressive  labor  legislation  just  mentioned.  Based 
upon  an  examination  of  the  "Acceptances"  filed  with  the 
Secretary  of  the  Commonwealth,  the  writer  has  been 
able  to  make  a  comparison  between  the  two  groups  of 
plants  with  respect  to  the  action  which  they  have  taken. 
(The  data  are  for  the  close  of  1916.)  While  it  may  be 
merely  a  coincidence,  it  is  noticeable  that  in  every  case 
the  municipalities  having  private  ownership  have  more 
readily  adopted  this  recent  labor  legislation.  On  the  other 
hand,  the  cities  and  towns  owning  their  plants  have  been 
particularly  backward  about  voting  for  the  eight-hour 
day  and  the  vacations,  which  would,  in  many  cases,  ne- 
cessitate an  increased  expenditure  for  the  operation  of 
their  lighting  plants. 

2.  Valuation  of  Estates  and  Tax  Rates  ^ 

A,  Municipalities  served  by  Generating  Plants 

Frequently  it  is  asserted  that  pubHc  ownership  of  such 
an  industry  as  the  electric  light  and  power  business  is 
not  conducive  to  the  growth  of  a  community,  first,  be- 
cause little  effort  is  exerted  to  attract  new  enterprises,  no 
inducements  are  offered,  and  no  risks  run;  and,  secondly, 
because  the  already  estabHshed  concerns  are  often  shab- 
bily treated.  There  is  no  doubt  that  a  public  plant  can 
with  impunity  adopt  a  policy  which  would  prove  highly 

>  Mass.,  1912,  ch.  503. 

*  Cf.  Mass.  Labor  Bulletin,  No.  114, 1915,  pp.  84-85.  Cf.  also  ch.  xn, 
infra.  Appearances  are  sometimes  deceptive. 
'  Appendix,  pp.  424-425. 


disastrous  if  attempted  by  a  private  concern.  Yet,  if  our 
group  of  public  plants  (those  generating  current  are  here 
referred  to)  had  followed  a  conspicuously  mistaken  policy 
in  this  regard,  we  might  expect  a  slower  growth  in  the 
population  of  the  districts  served,  —  which,  by  the  way, 
has  not  been  the  case  during  the  past  five  years,  —  and, 
in  lieu  of  that,  we  might  at  least  have  looked  for  a  less 
rapid  increase  in  the  total  valuation  of  property  in  the 
places  served  by  them  than  in  the  territory  supplied  by 
the  corresponding  group  of  private  plants.  Oiu*  figures, 
however,  indicate  that  the  growth  in  assessed  valuation 
of  estates  has  gone  on  at  equal  pace  in  both  cases,  35  per 
cent  for  the  companies  and  34  per  cent  for  the  municipal 

plants. 

It  is  rather  interesting  to  note  that  the  per  capita  valua- 
tion of  estates  is  34  per  cent  higher  ($1,171)  in  the  terri- 
tory served  by  the  companies  than  in  that  served  by  the 
other  group  ($874).  Also,  the  ratio  of  taxpayers  to  cus- 
tomers is  very  nearly  the  same  in  each  case  (42.6  and  38.8 
per  cent  respectively).  In  view  of  this  noticeable  diver- 
gence between  the  two  parties  who  are  most  concerned 
about  the  results  of  public  ownership,  it  is  highly  impor- 
tant for  the  municipal  plants  to  avoid  mulcting  one  class 
in  order  to  benefit  the  other.  An  injudicious  financial 
policy  would  mean  that  many  who  have  received  no  direct 
services  from  their  electric  plant  would  be  called  on 
through  the  tax  levy  to  bear  the  burden  of  losses  for  which 
they  were  in  no  way  responsible. 

From  a  study  of  the  tax  rates  in  the  places  in  which 
the  plants  are  situated,  it  is  evident  that  the  rates  are 
about  8  per  cent  higher  ($20.97  per  $1,000  valuation)  in 
the  municipalities  owning  their  plants  than  in  those  dis- 
tricts served  by  the  companies  ($19.42  per  $1,000).  The 
rate  of  increase  since  1910,  though  not  marked  in  either 
case,  has  been  40  per  cent  more  rapid  in  the  former  than 
in  the  latter  (10.4  as  opposed  to  7.4  per  cent).  Whether 


268 


MUNICIPAL  ELECTRIC  LIGHTING 


this  may  be  in  some  measure  an  artificial  difference,  due 
to  the  lower  valuation  of  estates  in  those  districts  having 
pubHc  ownership,  it  would  be  difficult  to  state.  It  is 
obvious,  however,  that  frequent  calls  are  made  on  the 
taxpayers  for  funds  to  finance  improvements  and  exten- 
sions, as  well  as  to  cancel  old  debts.  The  deficits  which 
have  existed  from  the  beginning  show  clearly  that  the 
financial  management  of  our  municipal  plants  has  been 
such  as  to  impose  added  burdens  on  the  tax  levy.  The 
total  appropriations  for  construction,  to  date,  amount  to 
more  than  $820,000.  And,  in  addition,  there  have  been 
appropriations  for  bond,  note,  and  sinking  fund  pay- 
ments, which  cannot  by  any  means  always  be  regarded 
as  merely  the  payment  for  street  hghting.  These  sums, 
compounded  annually,  would  disclose  the  fact  that  the 
pubUc  has  contributed  to  its  experiment  in  ownership  a  far 
greater  amount  than  at  first  is  evident.  The  usual  result 
of  municipal  industry  which  is  not  in  all  respects  carried 
on  as  a  commercial  enterprise,  and  which  can  always 
call  upon  the  taxpayers  to  make  good  any  losses,  no 
matter  how  incurred,  is  to  make  and  keep  the  tax  rates 
comparatively  high. 

But,  while  the  foregoing  analysis  is  suggestive  it  is  far 
from  conclusive,  inasmuch  as  the  five-year  period  covered 
is  too  brief  to  give  sufficient  background.  In  order  to 
discover  whether  there  is  any  vital  connection  between 
the  valuation  of  estates,  the  tax  rates,  and  municipal 
ownership,  it  is  necessary  to  study  the  data  from  the  be- 
ginning. Accordingly,  in  the  accompanying  tables  are 
presented  analyses  of  the  material  found  in  various  re- 
ports of  the  State  Tax  Commissioner.  Only  the  valua- 
tion of  real  estate  is  considered  (which,  of  coiu-se,  includes 
buildings  and  factory  equipment  as  well  as  land),  for  it 
is  of  much  more  significance  than  the  total  valuation  of 
all  estates,  since  it  will  probably  be  more  directly  influ- 
enced by  the  general  state  of  the  public  utility  service  in 


IN  MASSACHUSETTS 


269 


Table  52.  Valuation  of  Real  Estate  and  Tax  Rates  in 
Municipalities  in  wmcn  Generating  Plants  are  Located 


A 

Assessed  valuatiofi  of  real  estate  «<  ^^-'^^^JP^J^'^^^^  ^'^^ 
in  which  plants  are  located  — {to  nearest  $500,000  —  ou.uuu 

omitted) 

1890 

1895 

1900 

1905 

1910 

1915 

Total 
increase 
(dollars) 

C!mnnA.niAfl.    •..••.•••• 

$76,0 
49,5 

■  •  ■  • 

17,0 

192,0 

70,5 

(71,0) 
20,5 

$110,0 

80,5 

(82,0) 
2U,0 

$131,5 

88,0 

(91,0) 
31,0 
(32,0) 

$154,0 
104,0 

•  •  •  • 

37,0 

•  •  •  • 

$188,0 

132,0 

(135,0) 
48,5 

•  •  •  • 

$112,0 

Municipal  plttntsi 

(Corrected  for  changed 

82,5 
(85,5) 

FTnlvnkA 

81,5 

(Corrected) 

•  •  •  • 

•  •  •  • 

•  •  •  • 

•  •  •  • 

»  Holyoke  omitted. 


Increase  of  real  estate  valuation  by  percentages  between  certain 
periods — {to  nearest  0.5  per  cent) 


Companies 

Municipal  plantsi 

(Corrected  for  changed 
ownership) 

Holyoke 

(Corrected) 


1890- 
1895 

1895- 
1900 

1900- 
1906 

1905- 
1910 

1910- 
1915 

1890- 
1916 

21.0 

20.0 

19.5 

17.0 

22.0 

147.4 

42.6 

14.0 

9.0 

18.0 

27.0 

166.6 

(43.4) 
20.5 

■  •  •  • 

(15.5) 
41.5 

•  •  •  • 

6.9 
(10.3) 

•  •  •  • 

19.4 

•  •  •  • 

31.1 

•  ■  •  • 

(172.7 
186.3 

•  •  •  • 

1895- 
1915 


106.6 

87.2 

(90.1) 
67 .2* 


189fr- 
1910 


67.4 

47.2 

(50.7) 
27.6» 


I 


1  Holyoke  omitted. 


i  1900-1915. 


8  1900-1910. 


Companies. . . . 
Municipalities. 


Tax  rate  per  $1000  assessed  valuation  of  all  estates  at  certain 
periods  (arithmetical  average) 


Percentage  increase  of  tax  rales  between  certain  dates 

D 

1890- 
1895 

1895- 
1900 

1900- 
1J»06 

1905- 
1910 

1910- 
1915 

1890- 
1916 

1895- 
1915 

l^rwnruKnlpR         ...  «>•••• 

9.4 
12.7 

3.1 
5.0 

7.5 

8.4 

-1.0 
-1.0 

7.4 
10.4 

28.3 
40.0 

17.1 
23.8 

Municipalities 

Tax  rates  in  municipalUies  whu^h  acquired  their  plants  b^ween 
certain  dates,  together  with  percentage  increase  in  rate  dunng 
first  five  years'  ownership 

S 

Num- 
ber 

Bate 

Per  cent 
increase 

Rate  in 
1900 

Per  cent 
increase 

Bate 

in 
1905 

Per  cent 

1890 

1805 

increOrSe 

Between  1890  and  1894. 
Between  1 895  and  1899 . 
Between  1 895  and  1 S09 . 
Between  1900  and  1904. 

6 
6 

f 

$14.28 

•  «  •  • 

•  •  ■  • 

$18.15 

16.90 

(16.80) 

27.0 

•  •  •  • 

•  ■    a   • 

•  •  •  • 

$18.00 

(18.50) 

16.45 

•  •  ■  • 

6.5 
(10.0) 

*  •   ■  • 

$17.98 

•  •  •  • 

•  *  •  * 

«  •  •  • 

9.3 

270 


MUNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


371 


a  given  locality  and  will  be  more  sensitive  to  changes  in 
business  conditions.  As  statistics  of  this  kind  are  liable 
to  be  misleading,  the  writer  merely  gives  them  for  what 
they  are  worth,  having  made  an  honest  attempt  at  a 
plausible  interpretation.  It  is  not  altogether  possible 
fully  to  verify  the  accuracy  of  the  presumptions  which 
may  in  certain  instances  be  created. 

From  the  figures  given  it  appears  that  the  valuation 
of  property  other  than  personal  in  the  group  of  munici- 
palities which  later  acquired  their  own  generating  plants, 
was  increasing  with  great  strides  between  1890  and  1895, 
twice  as  rapidly  in  fact  as  the  valuation  of  real  estate  in 
the  other  group.  Now,  while  it  is  possible  that  the  valua- 
tion in  individual  cases  might  be  very  arbitrary,  this 
would  probably  not  occur  more  frequently  in  one  group 
than  in  the  other,  and  the  influence  of  this  factor  may 
be  almost  wholly  discounted  when  we  are  interested  in 
the  total  valuation  of  real  estate  in  a  group  of  seventeen 
places  chosen  more  or  less  at  random.  Again,  it  is  doubt- 
less true  that  a  good  deal  of  the  increase  was  occasioned 
by  the  installation  of  the  private  plants  which  were  later 
taken  over  by  the  municipalities  in  question  —  an  influ- 
ence which,  by  the  way,  had  in  some  measure  spent  its 
force  in  the  other  group,  since  their  plants  were  built  on 
the  average  a  few  years  earUer.  At  any  rate,  there  was  a 
period  of  unusual  growth  in  property  values  in  these 
municipalities  just  preceding  the  time  when  they  entered 
upon  municipal  ownership.  The  rate  of  increase  would 
be  even  greater  if  a  correction  were  made  because  of  the 
fact  that  the  plants  acquired  were  not  included  in  the 
Ux  levy  of  1895. 

Between  1893  and  the  end  of  1895,  however,  eight 
municipahties  began  to  do  a  commercial  lighting  busi- 
ness, and  by  the  end  of  1900  fourteen  out  of  seventeen, 
excluding  Holyoke,  were  operating  their  own  plants.  In 
view  of  this  fact,  it  is,  to  put  it  mildly,  very  surprising  to 


find  that  the  rate  of  increase  in  real  estate  valuation  in 
these  municipalities  had  dropped  from  more  than  42  per 
cent  in  the  preceding  five-year  period  to  only  14  per  cent 
from  1895  to  1900.   And  in  the  next  five  years,  after  all 
of  the  group  have  undertaken  the  lighting  business,  there 
is  a  still  more  conspicuous  drop  in  the  rate  of  increase  to 
9  per  cent.    If  corrections  be  made  for  the  value  of  the 
plants  taken  over  themselves,  the  rates  are  slightly  in- 
creased to  15.5  and  11  per  cent  respectively.  On  the  other 
hand,  the  group  of  municipalities  served  by  the  com- 
panies showed  practically  no  variation  in  the  rate  of  in- 
crease of  real  estate  valuation   throughout  the  entire 
period,  while  in  the  ten-year  period,  1895  to  1905,  their 
valuation  had  increased  43  per  cent,  as  opposed  to  only 
28  per  cent  in  the  other  group  after  adjustments  are  made. 
It  is  still  more  perplexing  to  find  that  the  city  of  Hol- 
yoke, which  purchased  its  plant  in  1902  after  some  years 
of  litigation,  suffered  a  drop  in  rate  of  increase  of  real 
estate  valuation  from  41.5  per  cent  in  the  period  from 
1895  to  1900  to  slightly  more  than  10  per  cent  in  the  suc- 
ceeding five-year  period,  even  after  the  correction  is  made 
for  the  change  in  ownership.  It  has  been  discovered  that 
the  valuations  were  abnormally  increased  during  the  first 
period,  but  even  that  fact  seems  scarcely  sufficient  to 
account  for  the  marked  decrease  in  rate  from  1900  to 
1905.^    Though  there  are  doubtless  many  other  reasons 
for  this  decrease  not  known  to  the  writer,  yet  the  fact 
that  the  rate  increased  again  to  19.4  per  cent  for  the 
years  1905  to  1910,  and  the  fact  that  there  is  a  close  cor- 
relation between  the  figures  for  Holyoke  and  for  the  group 
of  municipalities  owning  their  plants,  makes  it  an  open 
question   whether   the   uncertainties   regarding   business 
which  might  naturally  have  resulted  from  the  public 

1  A  large  amount  of  property  belonging  to  the  Holyoke  Water  Power 
Company,  and  formerly  not  taxed,  was  added  to  the  taxable  estates 
ahortly  before  1900. 


272 


MUNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


273 


ownership  agitation,  were  partially  responsible,  at  any 
rate,  for  the  almost  stationary  state  of  real  estate  values 
during  this  period. 

It  might  be  argued  in  this  connection  that  the  munici- 
palities, when  acquiring  their  electric  light  plants,  were 
also  induced  at  about  the  same  time  to  take  over  their 
water-supply  systems,  and  that  in  this  way  the  valua- 
tion of  real  estate  for  the  time  being  was  made  compara- 
tively less.  Having  looked  carefully  into  this  matter, 
however,  the  writer  finds  that  the  effect  of  any  correction, 
with  a  view  to  eHminating  this  factor,  works  to  the  dis- 
advantage of  the  group  under  public  ownership  and  to 
the  advantage  of  the  group  under  private  ownership.  For, 
while  the  former,  between  1890  and  1905  purchased 
or  constructed  waterworks  to  the  total  value  of  about 
$1,200,000,  as  indicated  by  the  statement  of  municipal 
assets  and  liabilities  retmned  to  the  State  Tax  Com- 
missioner in  the  years  1890,  1895,  1900,  and  1905,  the 
latter  took  over  in  the  same  period  systems  valued  at 
about  $2,500,000,  or  about  twice  as  great  a  valuation  as 
in  the  first  case. 

Now,  we  would  not  be  at  all  warranted  in  drawing  any 
sweeping  conclusions  from  the  preceding  figures.  Too 
many  qualifying  conditions  may,  without  our  knowledge, 
enter  into  the  problem.  Yet,  in  view  of  the  fact  that  the 
municipahties  now  owning  their  plants  were  at  the  earliest 
period  growing  far  more  rapidly  than  the  other  group 
which  always  retained  private  ownership,  the  data  for 
the  intervening  years  may  indicate  that  many  business 
enterprises  were  kept  out  or  discouraged  because  of  in- 
adequate service  or  the  lack  of  reasonable  and  customary 
inducements.  It  may  also  be  that  there  was  a  general 
decrease  in  "progressiveness,"  due  to  the  unbusinesslike 
policies  which  certainly  characterized  the  earlier  stages 
of  pubUc  ownership  of  electric  plants  in  this  State,  which 
might  be  expected  to  "react"  upon  the  local  business 


men  in  such  a  way  as  to  cause  them  to  quit  "boostmg" 
for  their  municipalities.  While  private  electric  compa- 
nies frequently,  on  their  own  initiative,  endeavor  to  bring 
in  new  factories  which  wiU  improve  their  power  load, 
it  is  well  known  that,  until  recently  at  any  rate,  practi- 
cally none  of  the  public  plants  have  followed  this  poUcy. 
Conversation  with  those  in  a  position  to  know,  including 
business  men  as  well  as  the  present  managers  of  munici- 
pal hghting,  has  convinced  the  writer  that  there  is  much 
truth  m  the  suggestions  here  made.^ 

Finally,  the  fact  that  the  rate  of  increase  in  real  estate 
valuations  was  by  1910  practically  the  same  as  that  in 
the  places  served  by  the  companies,  and  was  somewhat 
more  rapid  between  1910  and  1915,  may  point  in  some 
measure  to  an  encouragement  of  new  industries  and  a 
general  increase  in  business  activity,  as  a  result  of  the 
attempt  to  develop  a  power  load  on  the  part  of  the  munic- 
ipal plants,  which  had  hitherto  been  lagging  far  behind. 
It  must,  however,  be  remembered  that,  as  a  group,  the 
municipalities  owning  their  plants  are  at  present  much 
more  active  manufacturing  communities  than  are  the 
others,  for  reasons  which  in  a  majority  of  cases  probably 
have  no  direct  dependence  upon  the  local  light  and  power 
business.    Many  large  estabhshments  have  always  used 
water  power,  and  others  have  been  forced  to  install  elec- 
tric plants  of  theur  own,  because  of  the  inadequacy  of  the 
facihties  offered  by  the  local  plants. 

Whatever  may  be  the  reasons,  the  disparity  still  re- 
mains between  the  two  groups.  If  the  period  since  1895 
be  taken,  as  that  date  really  marks  the  beginning  of 
municipal  electric  lighting  in  Massachusetts,  it  is  found 
that  the  total  increase  of  real  estate  valuation  in  the  places 
having  public  ownership  has  increased  in  twenty  years 
about  90  per  cent,  after  corrections  are  made,  while  the 
valuation  of  the  corresponding  group  of  municipalities 

1  Cf.  ch.  XII,  pp.  340-341. 


4 


1 


274 


MUNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


275 


under  private  ownership  has  increased  nearly  107  per  cent, 
or  approximately  one  fifth  more  rapidly.  And  during  the 
critical  period  from  1895  to  1910  the  increase  in  the  latter 
was  30  per  cent  more  rapid  than  in  the  former. 

In  the  matter  of  tax  rates  it  is  interesting  to  note  that 
the  group  of  municipahties  which  later  acquired  their 
lighting  plants  actually  had  a  slightly  lower  average  rate 
in  1890  than  had  the  other  group.  However,  the  rates 
began  to  rise  for  all  concerned,  and,  as  public  ownership 
became  more  common,  for  every  period  the  rate  of  in- 
crease was  considerably  greater  in  these  places  than  in 
those  served  by  the  companies;  while  the  total  increase 
during  the  period  here  studied  was  more  than  40  per  cent 
greater  in  the  former  than  in  the  latter.  It  must  further 
be  observed  that  if  the  municipahties  now  owning  their 
plants  be  divided  into  groups  according  to  the  periods  in 
which  this  business  was  imdertaken,  the  rate  of  increase 
in  the  tax  rates  of  these  is  markedly  more  rapid  for  the 
first  five  jrears  of  ownership  than  that  of  the  remainder  of 
the  places  not  yet  under  pubhc  ownership  or  which  have 
already  for  some  time  owned  their  plants. 

The  reasons  for  the  fact  just  mentioned,  and,  indeed, 
for  the  more  rapid  increase  in  the  average  tax  rate  through- 
out the  period,  have  already  been  partially  suggested  as 
caused  by  appropriations  to  meet  operating  deficits  as 
well  as  some  of  the  fixed  charges.  Yet  this  reasoning 
would  apply  more  particularly  to  the  earher  periods, 
when,  as  a  matter  of  record,  the  increase  was  not  so  rapid 
as  at  present.  During  one  of  the  five-year  periods,  how- 
ever, from  1905  to  1910,  there  was  in  both  groups  actually 
a  sUght  decrease  in  the  rates.  The  entire  problem  is  ac- 
cordingly beset  with  a  good  deal  of  uncertainty.  Never- 
theless, we  must  remember  that  there  are  numerous  in- 
direct expenses  which  result  when  a  municipahty  becomes 
an  entrepreneur^  but  which  it  is  rather  hard  to  estimate. 
Pubhc  wants  tend  to  be  multipUed.   Furthermore,  there 


is  the  possibility  that  a  municipality,  having  gotten  a 
good  taste  of  public  ownership  of  this  kind,  and  having 
contracted  a  considerable  debt  in  consequence,  inclines 
to  be  somewhat  more  careless  about  the  expenditure  of 
money.  To  incur  debts  which  later  become  very  burden- 
some, may  become  habitual.  The  pubhc  purse-strings 
are  often  not  held  so  tightly,  and  the  tax  rate  must  accord- 
ingly go  up,  particularly  in  cases  where  there  is  not  an 
unusual  increase  in  property  valuations.  Nor  does  the 
writer  mean  to  dogmatize  on  this  question  of  tax  rates, 
for,  as  in  the  matter  of  valuations,  there  are  too  many 
unknown  factors  entering  into  the  problem,  many  of 
which  are  dependent  upon  local  conditions.   Suffice  it  to 

Table  53.    Financial  Condition  of  Municipalities  in 
WHICH  Generating  Plants  are  ixxjated,  1915 

Munieipalitiet         Munitipalitie* 
owning  -dantt  served  by 

{excluding  Holyoke)        armpaniei 

Valuation  of  estates $172,750,000      $269,800,000 

Outstanding  indebtedness $9,556,000        $12,227,000 

Electric  plant  debt $1,508,825 

Annual  expenditures  for  maintenance,  in- 
terest, and  debt  requirements  (1914)i . . .      $4,208,000  $5,795,000 
Including  expenses  of  electric  light  de- 
partment         $4,824,000 

PopulaUon 200,062  244,021 

Per  capito  valuation $864.  $1,106. 

Per  capita  debt $48.  $50. 

Excluding  lighting  debt $40. 

Per  capita  expenses $21 .03  $28.75 

Including  lighting  expenses $24 .12 

Ratio  of  debt  to  valuation  (per  cent) 5.6  4.5 

Excluding  lighting  debt .  ^ 4.6 

Ratio  of  expenses  to  valuation 2.4  2.1 

Including  lighting  expenses 2.8 

»  The  expenditures  for  1914  are  used  because  later  data  are  not  yet  available.    It  ii 
probable  that  the  6gurea  would  be  higher  for  1915. 


m 


I. 

II 


276  MUNICIPAL  ELECTRIC  LIGHTING 

say  that,  whatever  may  be  the  correct  explanation,  the 
average  tax  rate  in  the  group  of  cities  and  towns  which 
own  their  Hghting  plants  has  markedly  increased,  and 
the  rate  of  increase  has  been  40  per  cent  more  rapid  than 
in  the  other  group  under  private  ownership.  Table  53, 
which  the  writer  presents  without  comment,  may  be  of 
interest  to  those  who  wish  to  theorize  further  on  this 
subject. 

B.  Municipalities  served  by  Purchasing  Plants 

It  is  scarcely  necessary  to  go  back  of  1910  in  our  study 
of  this  aspect  of  the  municipal  ownership  of  purchasing 
plants,  for  the  problems  which  they  present  are  much 
different  from  those  which  characterize  the  group  which 
has  just  been  discussed.  The  prosperity  of  the  territory 
of  a  plant  which  buys  its  current,  other  things  being  equal, 
probably  depends  more  upon  the  source  of  supply  than 
upon  the  plant  itself. 

It  does  appear,  however,  from  Table  54  that  the  real 
estate  valuations  of  the  districts  served  by  the  munic- 
ipal plants  have  been  increasing  much  more  rapidly 
than  they  have  in  the  places  occupied  by  the  com- 
panies. While  the  rates  of  increase  were  in  both  cases 
comparatively  close  together  between  1900  and  1910, 
the  rate  from  1910  to  1915  was  almost  twice  as  rapid 
for  the  former  as  for  the  latter.  There  is  also,  no  doubt, 
a  close  correlation  between  the  rapid  appreciation  in 
real  estate  values  since  1910  and  public  ownership  in 
these  towns,  for,  if  we  include  Wellesley,  which  began  to 
operate  its  commercial  lighting  business  early  in  1907, 
nineteen  out  of  twenty-one  of  them  adopted  municipal 
ownership  between  1907  and  1914.  Of  these  places,  fur- 
thermore, only  six  were  previously  served  by  companies, 
and  in  some  of  these  cases  the  service  was  far  from  satis- 
factory. Hence  it  is  not  to  be  wondered  at  that  property 


IN  MASSACHUSETTS 


277 


Table  64.  Valuation  of  Real  Estate  and  Tax  Rates 

(Purchasing  Plants) 


Corapaniesi . . . 

Muuicipalities* 

Norwood . . . . 


Valualion  of  real  estate  at  certain 
dates  in  districts  in  which  plants 
are  located  — {to  nearest  $500,000 
—  00,000  omitted) 


1900 


$29.0 

27.0 

3.6 


1905 


932.6 

30.5 

4.3 


1910 


$38.0 

3^5.5 

8.4 


1915 


$t4.0 

47.0 

I  11.5 


Total 
increase 


$15.0 

20.0 

7.9 


Percentage  increnne  of  real  estate 
valuaXion  between  certain  daies 


1900- 
1905 


12.1 
13.0 
19.4 


1905- 
1910 


16,9 
19.7 
95.3 


1910- 
1915 


15.8 
29.0 
37.0 


1900- 
1915 


51.7 

74.0 

219.4 


1905- 
1915 


36.4 

54.4 

200.0 


I  Franklin  omitted  -  no  return  for  Turner's  Falls.  «  Norwood  omitted. 


Comitaniesi... 
Municipalities. 


Tax  rate  per  $1000  assessed  valua- 
tion of  ail  estates  at  certain  dates 
{arithmetieal  average) 


1900 


$16.35 
14.48 


1905 


$16.46 
15.13 


1910 


1915 


$17.15    $17.65 

15.00       17.60 

(15.30)«  (17.83) 


Total 
increase 


$1.30 
3.12 


Percentage  increase  of  tax 
rates  between  certain  dates 


1900- 
1905 


0.6 
4.5 


1905- 
1910 


4.2 
-1.0 
(+1.0)« 


1910- 
1915 


2.9 
17.3 


1900- 
1915 


8.0 
21.5 


1906- 
1915 


7.3 
16.4 


1  Franklin  omitted  —  no  return  for  Turner's  Falls, 
i  Norwood  omitted  because  of  abnormal  conditions. 

increased  greatly  in  value  since  1910  as  compared  with 
the  other  group  of  towns  which  were  supplied  with  elec- 
tricity many  years  earUer,  even  though  there  may  have 
been  no  particular  increase  in  the  number  of  industrial 
establishments  and  no  noticeable  heightening  of  busi- 
ness activity.  And,  finally,  it  is  more  than  probable  that 
many  of  these  little  towns  are  more  progressive  than  those 

of  the  other  group. 

The  case  of  Norwood,  which  apparently  has  had  a  200 
per  cent  increase  in  real  estate  values  during  the  past  ten 
years,  is  abnormal  and  somewhat  misleading.  During 
this  period,  or  more  precisely  between  1905  and  1910, 
the  town  enjoyed  a  thorough  house-cleaning,  and  among 


I 


278 


MUNICIPAL  ELECTRIC  LIGHTING 


other  things  an  attempt  was  made  to  assess  property  at 
its  true  value,  as  a  consequence  of  which  poHcy  there 
was  an  enormous  artificial  appreciation,  which  in  turn 
led  to  an  almost  50  per  cent  drop  in  the  tax  rate.  There 
is,  however,  no  denying  that  Norwood,  due  in  large 
measure  to  unusually  favorable  circumstances,  has  made 
a  very  creditable  showing  with  its  plant  and  seems  to 
have  lost  nothing  in  operation. 

Finally,  it  is  worth  while  to  note  that  the  average  tax 
rate  in  these  municipalities  which  have  gradually  ac- 
quired their  plants,  was  much  lower  in  1900  than  the  aver- 
age rate  in  the  other  group  of  towns,  and  there  was  prac- 
tically no  increase  until  after  1910.  But,  while  the  rate 
in  the  places  served  by  the  companies  remained  almost 
stationary  between  1910  and  1915,  the  rate  in  the  towns 
having  municipal  ownership  —  all  of  them  having  now 
acquired  their  plants  —  increased  more  than  17  per  cent, 
or  six  times  as  rapidly  as  the  average  rate  in  the  former. 
Though  the  tax  rates  in  the  two  groups  were  in  1915  prac- 
tically the  same,  yet  during  a  period  of  ten  years  the  in- 
crease in  rates  has  been  more  than  twice  as  rapid  under 
pubhc  ownership  as  under  private  ownership,  and  this  in 
spite  of  the  much  greater  appreciation  in  value  of  estates. 

Here,  again,  we  must  avoid  drawing  unwarranted  con- 
clusions from  insufficient  evidence;  but  the  rapid  increase 
in  rates  during  the  last  period  seems  to  have  some  signifi- 
cance when  compared  with  the  figures  for  the  other  group 
of  pubUc  plants.  Hence  a  few  suggestions  may  not  be 
amiss.  Some  of  the  possible  or  probable  reasons  for  this 
state  of  affairs,  though  not  so  generally  apphcable  in  this 
connection,  have  been  already  referred  to  in  the  above 
discussion  regarding  the  generating  plants.  It  must  fur- 
ther be  observed  that  these  Httle  towns,  having  tried  the 
experiment  of  municipal  ownership,  probably  found  it 
desirable  to  make  numerous  other  civic  betterments  which 
had  too  long  been  neglected,  just  as  a  man  who  buys  a 


IN  MASSACHUSETTS  279 

new  suit  finds  that  he  must  have  a  new  hat,  a  tie,  and  a 
few  more  things  to  go  with  it.  No  doubt  numerous  im- 
provements were  made  in  the  public  highways,  and  pos- 
sibly land  was  acquired  or  developed  for  parks  —  which 
could  be  lighted  with  municipal  electricity.  It  is  also 
true  that  a  considerable  number  of  them  have  installed 
water-supply  systems  within  the  past  few  years,  which, 
because  of  local  conditions,  it  has  often  been  impossible 
to  avoid  operating  at  a  loss. 

Table  55.  Financial  Condition  of  Municipalities  in  wracH 
Purchasing  Plants  are  located,  1915 

Mujiidpalities      MunicipaliSiea 
ovming  planU  tcned  by 

(/excluding  Nonoood)      eompaniea 

Valuation  of  estetes $69,748,000      $68,151,000 

Outstanding  indebtedness $1,527,000  $879,000 

Electric  plant  debt $1253,163 

Annual  expenditures  for  maintenance,  inter- 
est and  debt  requirements  (1914)i  $1,085,000        $1,041,000 
Including  expenses  of  electric  light  de- 
partment       $1,264,138 

Population 53,581  69,397 

Per  capita  valuation $1,300                 $982 

Per  cajyita  debt $28.50             $12.70 

Excluding  lighting  debt $24.30 

Per  capita  expenses $20.25              $15.00 

Including  lighting  expenses $23.60 

Batio  of  debt  to  valuation  (per cent) 2.2  l.S 

Excluding  lighting  debt  (per  cent) 1 .86 

Batio  of  annual  expenses  to  valuation  (per 

cent) 1.65  1.6S 

Including  lighting  expenses  (per  cent) 1.8  ... 

»  The  expenditures  for  1914  are  used  because  no  later  data  are  available.  The  figures 
would  probably  be  somewhat  higher  for  1915. 

But,  while  it  is  not  altogether  satisfactory  to  explain 
theoretically  why  the  tax  rates  should  have  increased, 
and  while  this  increase  may  only  in  a  slight  degree,  so 
far  as  these  towns  are  concerned,  indicate  that  the  plants 


1.1 


n 


i;f 


,> 


280 


MTNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


281 


) 


have  been  losing  money,  yet  we  are  at  least  safe  in  draw- 
ing the  conclusion  that  the  incentives  for  "boosting"  the 
rates  under  municipal  ownership  are  unusually  numerous 
and  urgent.  Though  it  is  entirely  too  soon  to  form  a 
fixed  opinion  on  the  subject,  for  reasons  which  have  been 
suggested  in  various  connections,  the  writer  feels  justi- 
fied in  predicting  that  the  next  five  or  ten  years  may  wit- 
ness an  even  more  noticeable  increase. 

8.  The  Intangible  Items 

In  1897,  a  special  investigating  committee,  appointed 
by  the  city  of  Holyoke  to  look  into  the  subject  of  muni- 
cipal electric  lighting,  reported  that,  under  public  owner- 
ship, there  would  result  a  saving  of  more  than  25  per  cent 
in  the  rates,  and  that  after  five  years  the  city  would  own 
its  plant,  debt  free.*  Holyoke  has  done  well,  and  the  rates 
are  low;  but  the  outstanding  liabilities,  current  and  funded, 
together  with  the  appropriations  from  the  tax  levy  for 
debt  payments,  at  present  amount  to  about  $1,200,000, 
though  the  plant  still  confines  its  operations  to  its  own 
narrow  territory,  and  probably  a  large  investment  in  a 
new  station  will  soon  be  needed. 

Sixteen  years  later,  another  special  committee,  having 
made  a  careful  investigation  with  the  assistance  of  a 
trained  engineer,  reported  to  the  selectmen  of  South 
Hadley  that,  if  the  town  would  take  over  the  plant  of  the 
South  Hadley  Falls  Electric  Company,  there  would,  in 
one  year,  be  effected  a  saving  to  the  municipahty  of  $4,250, 
and  the  street  lights,  which  had  been  costing  $5,800, 
could  thus  be  secured  for  $1,550.  The  plant  was  bought, 
—  and  under  the  first  year  of  public  management,  the 
actual  cost  of  the  street  Ughts,  allowing  for  taxes  lost, 
was  between  $6,500  and  $7,000,  or  one  sixth  higher  than 
when  the  service  was  supplied  by  private  enterprise. 

To  be  sure,  such  examples  are  merely  suggestive  rather 

>  Mass.  G.  &E.,  xm:  44. 


than  convincing,  yet  there  is  no  magic  in  the  mere  fact 
of  public  ownership  which  will  enable  service  to  be  ren- 
dered at  no  cost  to  the  public.  If  private  business  is  al- 
ready in  the  field,  and  if  that  business  is  properly  regu- 
lated, there  appears  to  be  Uttle  reason  for  expecting  that, 
in  the  economic  sense,  a  gain  will  result  from  municipal 
operation  of  that  service.  On  the  other  hand,  there  may 
be  benefits  of  another  sort,  due  to  the  enhvened  interest 
which  the  people  in  general  take  in  their  public  affairs. 
To  quote  from  the  aforementioned  South  Hadley  Report, 
the  committee,  after  investigating  municipal  ownership 
in  the  eight  towns  of  the  State,*  made  the  following  state- 
ment: 

Suffice  it  to  say  that  all,  without  a  single  exception,  were 
heartily  in  favor  of  municipal  ownership,  for  hoiti  financial 
reasons  and  better  service.  .  .  .  The  matter  of  politics  has  not 
interfered  in  any  case  with  the  successful  administration  of  the 
plant.* 

They  also  received  favorable  reports  from  a  number  of 
other  towns  in  the  State. 

Though  the  writer  himself  has  not  been  able  in  person 
to  investigate  the  actual  conditions  in  all  of  the  places 
mentioned,  he  is  glad  to  believe  that  they  are  as  stated, 
in  these  towns,  as  well  as  in  most  of  the  other  municipali- 
ties in  the  State  which  own  their  distributing  system  and 
purchase  their  current.  But  a  reverse  pictiu^  is  possible, 
and  corrupt  politics  may  be  foimd  instead  of  civic  better- 
ment. From  what  it  has  been  possible  to  ascertain,  the 
mimicipahties  having  their  generating  plants  are  not  al- 
ways so  well  satisfied.  Some  of  them  would  gladly  dis- 
pose of  their  plants.  It  has  been  in  many  instances  a  long, 
tiresome  struggle,  with  the  handicaps  resulting  from 
ignorant  or  hampered  management  and  lack  of  foresight, 

*  Shrewsbury,  Norwood,  Wellesley,  Groton,  West  Boylston,  Ashburn- 
ham,  Templeton,  and  Belmont.  Cf .  South  Hadley  Report,  p.  3. 

*  South  Hadley  Report,  p.  3. 


282 


MUNICIPAL  ELECTRIC  LIGHTING 


in  the  course  of  which  the  careful  supervision  of  the 
Board  has  prevented  many  serious  mishaps.  In  addition 
to  the  service  rendered  by  the  Board  directly  through  its 
audit  of  the  municipal  plant  returns,  and  its  advisory 
capacity,  an  expert  engineer  and  accountant  is  employed 
to  give  assistance  locally  to  those  plants  which  are  most 
in  need.  Thus  they  have  managed  to  keep  themselves 
going,  and  many  of  them  appear  to  have  done  well. 

Appearances,  however,  are  frequently  exceedingly  de- 
ceptive. One  cannot  always  discover  the  true  conditions 
without  being  actually  on  the  ground,  and  even  then  it 
may  be  almost  impossible  to  find  out  what  has  happened 
in  the  past.  In  this  connection  it  is  worth  while  to  give 
the  following  statement,  secured  by  the  writer  before  the 
local  survey  was  attempted,  from  the  very  efficient  mana- 
ger of  a  municipal  plant  which  had  appeared  for  many 
years  to  be  making  an  unusually  good  showing.  As  nearly 
as  may  be,  the  statement  is  here  recorded  just  as  the 
speaker  made  it: 

When  I  became  manager  of  the  plant  (about  two  years  ago) 
the  lines  were  in  such  a  condition  that  they  were  positively 
dangerous,  and  in  order  to  put  them  in  proper  shape  again,  it  was 
necessary  for  months  to  employ  four  times  as  many  linemen  as 
had  previously  been  employed.  The  voltage  was  inconstant  — 
50  or  60  when  it  should  have  been  110.  Trtmsformers  were  being 
overworked  —  in  many  cases  a  5  kilowatt  transformer  was 
bearing  a  15  kilowatt  load.  Many  of  the  important  customers' 
meters  were  found  to  be  hopelessly  incorrect.  The  circuits  were 
not  properly  balanced;  the  power  service  was  highly  imsatisfac- 
tory.  The  returns  made  by  this  plant,  as  those  of  many  other 
public  plants,  were  hopelessly  inaccurate,  being  for  the  most 
part  mere  guesswork  in  so  far  as  the  output  of  current  is  con- 
cerned, for  the  station  meters  had  not  been  tested  for  years. 
There  is  no  opportunity  to  look  for  new  business,  because  the 
old  cannot  be  properly  cared  for.  AU  in  all,  the  entire  plant  is 
so  much  out  of  date  that  it  would  require  a  doubling  of  the  invest- 
ment to  put  it  in  such  a  condition  that  it  could  properly  serve 
the  future  needs  of  the  community.  Yet  the  public  wiU  not  stand 
for  the  expense;  they  never  seem  to  realize  that  the  old  equip- 


IN  MASSACHUSETTS 


283 


ment  must  be  replaced  by  new  before  it  axitually  falls  to  pieces. 
1  am  trying  to  rectify  the  blunders  of  the  past;  but  life  as  manager 
is  simply  "one  damn  thing  after  another."  The  trouble  with 
this  plant,  as  with  most  of  the  municipal  plants  in  the  State 
is  that,  both  in  the  construction  and  the  operation,  no  foresight 
has  been  exercised.  Taking  the  public  plants  as  a  whole  "I  would 
not  give  them  much.*' 

Now,  the  reader  might  contend  that  the  above  state- 
ment is  Httle  more  or  less  than  a  bad  case  of  "sour  grapes." 
This,  however,  is  not  true.   The  information  was  secured 
under  conditions  which  left  no  doubt  as  to  the  veracity 
of  the  witness,  and,  furthermore,  the  writer,  upon  visit- 
ing the  plant  several  months  later,  found  conditions  even 
then  far  worse  than  he  had  been  led  to  expect.   He  also 
knows  that  the  condition  now  is  critical,  and  that  there 
have  been  some  active  negotiations  with  a  view  to  selling 
the  plant  to  private  interests,  which,  by  the  way,  will 
probably  never  amount  to  anything,  as  a  result  of  the 
legislation  passed  not  long  ago  to  the  effect  that  a  muni- 
cipality wishing  to  dispose  of  its  plant  must  go  through 
the  same  tedious  process  by  which  it  acquired  that  plant.  ^ 
Needless  to  say,  local  pride  will  probably  keep  the  ma- 
jority of  the  people  of  a  commimity  from  admitting  at  the 
polls  that  they  have  made  a  failure,  and  there  will  always 
be  many  who  fear  that  to  sell  their  plants,  even  though 
they  may  have  developed  into  white  elephants,  would  be 
to  "sell  out"  the  "public"  to  the  "interests."       ' 

Without  further  multiplication  of  examples,  the  writer 
can  state  that  the  foregoing  is  by  no  means  an  overdrawn 
picture  of  many  of  the  conditions  which  are  about  to  be 
discussed  in  the  following  chapters.  It  is  also  true  that, 
though  conditions  appear  at  present  to  be  somewhat  im- 
proved, the  ignorance  and  inefficiency  which  have  in 
numerous  instances  characterized  municipal  manage- 
ment, often  due  to  the  fact  that  so  many  people  feel  it 

»  Mass.,  1917,  ch.  205,  sect.  1. 


W( 


I, 


K 


V 


284 


MUNICIPAL  ELECTRIC  LIGHTING 


incumbent  on  them  to  take  a  hand,  have  frequently  been 
in  the  past  astounding.  Here,  as  in  Wisconsin,^  the  most 
arduous  task  of  the  Commissioners  has  been  that  of  im- 
pressing upon  the  municipalities  the  need  of  applying  to 
their  business,  in  part  at  any  rate,  the  same  tests  by 
which  the  eflSciency  of  private  business  is  measured.  Yet, 
after  a  quarter  of  a  century  of  regulation,  the  lesson  does 
not  seem  to  have  been  wholly  learned.  Reams  of  corre- 
spondence regarding  the  simplest  problems  of  accounting, 
are  from  year  to  year  passed  between  the  clerk  of  the 
Board  and  the  various  public  plants.  As  fast  as  managers 
change,  many  lessons  must  be  taught  afresh.  The  wonder 
is  that,  under  the  circumstances,  municipal  ownership 
has  done  so  well.  Whatever  may  have  been  the  short- 
comings of  commission  regulation  in  this  State,  the  degree 
of  success  attained  by  these  plants  has  been  due  in  large 
measure  to  the  Board,  rather  than  to  their  own  unaided 
efforts.  Here,  for  the  present,  let  us  leave  this  aspect  of 
our  study,  reserving  any  criticisms  or  suggestions  until  the 
results  of  the  local  survey  have  been  set  forth. ^ 

SUMMABT 

1.  The  returns  are  highly  unsatisfactory  so  far  as  the 
labor  and  wage  data  are  concerned. 

2.  There  has  been  a  more  rapid  rate  of  increase  in  the 
number  of  workers  employed  by  the  generating  compa- 
nies, due,  perhaps,  to  their  more  extensive  distributing 
system. 

3.  The  labor  eflSciency  of  the  companies,  in  both  groups, 
is  greater  than  in  the  municipal  plants.  That  of  the  pub- 

»  Holmes:  281. 

*  The  writer's  recent  work  on  the  Federal  Census  of  Central  Electric 
Light  and  Power  Stations  has  enabled  him  to  discover  how  far  superior 
the  records  and  business  methods  of  the  Massachusetts  municipal  plants 
are  to  those  of  most  other  states.  In  the  majority  of  cases  they  do  not 
seem  to  have  the  least  inkling  of  how  their  accounts  should  he  kept,  and 
they  rarely  know  whether  they  are  actually  making  or  losing  money. 


IN  MASSACHUSETTS 


iS5 


lie  generatmg  plants,  however,  is  increasing  rapidly,  while 
there  is  really  not  much  choice  between  the  purchasing 

plants. 

4.  So  far  as  can  be  ascertained  from  the  returns  there 
is  little  difference  between  the  average  wages  paid  by 

each  group. 

5.  The  municipalities  owning  then*  plants  have  been 
noticeably  slower  in  adopting  the  recent  progressive  labor 
legislation  than  have  the  municipalities  served  by  the 

companies. 

6.  The  tax  rates  of  the  municipalities  owning  their 
plants  have  increased  more  rapidly  in  both  groups  than 
have  the  rates  in  those  places  served  by  the  privately 
owned  plants.  The  average  tax  rate  is  at  present  consid- 
erably higher  in  those  municipalities  where  the  public 
generating  plants  are  found  than  in  the  other  group.  For 
the  purchasing  plants,   however,   the  rates  are  ahnost 

identical. 

7.  Though  formerly  the  real  estate  valuations  increased 
much  more  rapidly  in  the  districts  served  by  the  gener- 
ating companies,  at  present  the  rate  of  increase  seems  to 
be  about  the  same  for  the  two  groups.  In  the  municipali- 
ties owning  only  a  distributing  system,  the  rate  of  in- 
crease in  valuations  has,  on  the  contrary,  been  much 
more  rapid  than  in  the  places  securing  service  from  the 
corresponding  group  of  private  plants. 

8.  While  the  mimicipaUties  owning  their  distributing 
systems  only,  seem  in  most  cases  to  be  well  content,  there 
is  or  has  been  evidence  of  considerable  dissatisfaction  in 
many  of  the  places  which  own  their  generating  plants. 
The  returns  do  not  always  represent  the  true  conditions. 

9.  The  passing  degree  of  success  which  has  been  at- 
tained by  some  of  the  municipal  plants,  has  frequently 
been  due  largely  to  the  fostering  care  of  the  Board  of  Gas 
and  Electric  Light  Commissioners  rather  than  to  any  su- 
perior eflSciency  of  their  own. 


n^ 


CHAPTER  X 


THE  LOCAL  SURVEY 


Though  the  preceding  careful  analyses  of  all  available 
statistical  material  have  clearly  pointed  the  way  to  rather 
definite  conclusions  upon  the  subject  of  municipal  owner- 
ship, yet  the  reader  might  still  reasonably  entertain  doubts 
regarding  the  acciu-acy  of  this  investigation,  provided 
the  writer  had  not  made  a  first-hand  examination  of  the 
local  conditions  and  the  operating  policy  of  a  represen- 
tative number  of  the  plants  studied.  Many  doubtful 
questions  can  be  readily  solved  when  one  is  actually  on 
the  ground.  Much  additional  information  of  great  value 
can  thus  be  secured.  And,  finally,  a  personal  knowledge 
of  the  individual  cases  lends  interest  and  life  to  a  study 
which  might  otherwise  prove  somewhat  dull  and  aca- 
demic to  the  average  reader.  Accordingly,  the  writer  will 
in  the  present  chapter  outline  the  manner  in  which  he 
personally  conducted  an  extensive  local  survey  of  the 
groups  of  plants  under  consideration,  after  having  com- 
pleted his  analyses  of  the  annual  retiuns  made  to  the 
Board  of  Gas  and  Electric  Light  Commissioners. 


Before  launching  into  the  details  of  this  portion  of  our 
subject,  it  may  be  well  to  explain  with  some  care  the 
methods  of  investigation  which  were  followed.  In  the 
first  place,  the  writer,  assisted  by  expert  and  wholly 
disinterested  engineers  and  accountants,  studied  with 
great  care  the  operation  and  the  managerial  policies 
of  some  typical  central  stations  in  the  State  which  are 
not  included  in  the  fist  of  plants  herein  discussed.  Thus 
it  was  possible  not  only  to  become  more  familiar  with  the 
actual  conduct  of  the  electric  light  and  power  bu^ess. 


MUNICIPAL  ELECTRIC  LIGHTING 


287 


but  also  to  establish  certain  impartial  standards  which 
might  safely  be  used  in  passing  judgment  upon  those 
plants  which  were  later  to  be  visited. 

Then  a  composite  schedule  of  questions  was  prepared, 
covering  many  points  of  necessity  overlooked  in  the  an- 
nual returns,  though  highly  significant  for  one  who  is 
attempting  to  pass  upon  the  comparative  merits  of  pub- 
lic and  private  ownership.  Needless  to  state,  this  schedule 
was  meant  merely  to  serve  as  a  rough  sort  of  guide  in 
making  the  survey.  It  was  neither  inclusive  nor  exclu- 
sive, and  often  not  altogether  logical,  but  was  at  any 
rate  suggestive.  Some  of  the  questions  admitted  of  no 
definite  answer,  while  others  were  significant  only  to  the 
extent  that  they  might  throw  hght  upon  certain  obscure 
aspects  of  the  problem,  or  furnish  clues  to  further  inves- 
tigation. The  topics  were  not  treated  in  the  schedule  in 
the  order  in  which  they  have  been  developed  in  the  pre- 
ceding chapters.  In  fact,  this  order  was  in  some  cases 
practically  reversed,  as  it  seemed  easier  in  that  way  to 
secm*e  the  information  desired.  The  later  and  more  de- 
tailed questions  frequently  served  as  a  check  upon  the 
more  general  questions  appearing  earlier.  Perhaps  it  will 
be  of  some  interest  here  to  reproduce  this  list,  which  was 
substantially  as  follows: 

SCHEDULE  FOR  MUNICIPAL  AND  PRIVATE 
ELECTRIC  LIGHT  PLANTS 

Name  of  Plant 

{Answer  those  questicms  which  apply) 
A.  General 

1.  Why  did  municipality  acquire  plant? 

2.  What  is  the  attitude  of  the  citizens  in  general  toward  this 

form  of  management? 
8.  What  is  the  attitude  of  business  men? 

4.  What  is  the  attitude  of  the  municipal  government? 

5.  Is  there  friction  with  other  municipal  departments?    (In- 

dicate clearly.) 


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MUNICIPAL  ELECTRIC  LIGHTING 


6.  Have  politics  played  any  part?   If  so,  indicate  definitely. 

(Also  see  later  questions.) 

7.  Is  there  competition  of  gas  or  of  other  electric  plants? 

If  so,  what  relations  exist  between  the  two? 

8.  Is  any  effort  made  to  secure  new  business?    If  so,  what 

methods  are  followed? 

9.  Have  industries  been  kept  away  because  of  lack  of  ade- 

quate electric  facilities? 

10.  What  proportion  of  the  local  industries  is  supplied  with 

power? 

11.  Has  the  future  development  of  business  been  adequately 

provided  for? 

12.  What  are  the  objections,  if  any,  to  the  present  system,  and 

what  needed  changes  can  be  suggested? 

13.  Is  there  any  desire  to  change  to  private  (public)  owner- 

ship? Why? 

14.  Is  municipal  (or  private)  ownership  in a  real  success? 

Why  or  why  not? 

Remarks: 


B.  Management 
(These  questions  apply  largely  to  municipal  plants) 

1.  Is  the  Municipal  Light  Board  bi-partisan? 

2.  Have  the  members  of  the  board  a  technical  knowledge  of 

the  business? 
S.  By  whom  is  the  manager  appointed? 

(a)  For  how  long  a  term? 

(b)  How  long  has  present  manager  served? 

(c)  What  is  the  basis  of  selection? 

4.  How  much  authority  is  given  the  manager? 

5.  Has  his  authority  been  wisely  used? 

6.  Who  purchases  materials? 

7.  How  are  contracts  let? 

8.  Are  local  dealers  favored? 

9.  Is  it  difficult  to  obtain  supplies  because  of  slowness  of 

appropriations  ? 

10.  Is  tlie  manager  ever  offered  a  discount  by  dealers,  in  the 

form  of  a  **  rake-off  "? 

11.  Is  the  manager  a  technical  graduate?    If  not,  what  is  his 

general  education  and  his  special  preparation  for  this  work? 


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12.  Is  he  a  member  of  any  technical  society?  If  so,  give  name. 

Does  he  attend  meetings  of  any  scientific  societies? 

13.  I>oes  the  manager  give  all  of  his  time  to  the  work?    If 

not,  how  much? 

14.  Has  the  manager  ever  played  politics? 

15.  Has  he  ever  been  interfered  with  for  political  reasons? 

16.  Is  his  salary  deemed  adequate?    State  salary.    Does  he 

receive  any  perquisites  besides  his  salary?  ^ 

17.  Has  there  been  dishonesty  or  incompetence  in  the  past? 


Remarks: 


C.  Labor 


1.  How  is  the  average  number  of  employees  returned  to  the 

Commissioners  computed?  Give  number. 

2.  How  are  the  employees  chosen? 

3.  Have  political  considerations  governed  appointments  of 

employees?  ^  .        ,.  .    ^ 

4.  Have  employees  taken  any  undesirable  part  in  politics? 

5.  How  many  of  the  employees  are  teclmically  trained? 

6.  How  many  belong  to  technical  societies? 

7.  What  are  the  hours  of  labor? 

8.  What  are  the  customary  wages  for  the  different  classes  of 

labor  (salaried  employees  included)? 

9.  What  rate  is  paid  for  overtime? 

10.  Do  the  employees  give  all  of  their  time  to  the  electrical 

business? 

11.  Is  the  service  of  employees  of  other  municipal  departments 

utilized?  If  so,  to  what  extent? 

12.  Is  any  system  of  promotion  followed? 

13.  Is  there  any  definite  attempt  to  measure  the  comparative 

efficiency  of  employees? 

14.  How  long,  on  the  average,  are  the  different  employees 

retained? 

15.  Who  has  the  power  of  discharge? 

(a)  Is  there  an  appeal  from  this  decision? 

(6)  What  are  the  usual  groupds  for  discharge? 

16.  Are  foreigners  employed?  What  nationality? 

17.  What  vacations  or  holidays  are  allowed  with  pay? 

18.  What  is  the  extent  of  the  sick  leave  granted  (with  pay), 

if  any? 

19.  Is  there  any  welfare  work? 


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20.  Do  employees  receive  any  free  service  or  gratuities? 

21.  Are  they  unionized? 

22.  Have  there  been  any  strikes  or  less  serious  labor  troubles? 

23.  Do  the  employees  seem  to  be  satisfied  with  their  wages  and 

conditions  of  employment? 

24.  Are  the  relations  between  employees  and  employers  alto- 

gether pleasant? 

25.  Are  they  courteous  in  their  dealings  with  the  public? 

Remarks: 


D.  Central  Station 

1.  What  is  the  condition  of  the  boilers? 

2.  What  are  the  faciUties  for  handling  coal? 

3.  What  is  the  condition  of  engines? 

4.  What  is  the  condition  of  generators,  and  the  actual  capacity? 

5.  Are  there  any  storage  batteries? 

6.  How  often  are  the  station  meters  tested? 

7.  How  is  the  maximum  demand  measured? 

8.  In  general,  is  the  equipment  up-to-date?  Criticisms. 

9.  What  recent  additions  or  improvements  have  been  made? 

10.  What  additions  or  improvements  are  under  way  or  contem- 

plated? 

11.  Is  there  a  storeroom?  If  so,  in  what  condition  is  it  kept? 

12.  Is  the  **housekeepirig'*  of  the  plant  good? 

13.  Is  the  ventilation  adequate  and  are  safety  appliances  pro- 

vided? 

14.  Is  the  station  suflBciently  roomy? 

15.  Is  the  plant  adequate  for  the  present  as  well  as  for  the 

inmiediate  future?   (Indicate  clearly.) 

16.  Does  it  seem  desirable  to  continue  the  generation  of  current? 

If  not,  why? 

17.  Why  did  the  plant  cease  to  produce  its  own  current? 

18.  Is  the  electric  plant  operated  in  connection  with  a  water- 

supply  system  or  a  sewage  disposal  plant? 

19.  Is  the  location  of  the  central  station  satisfactory  from  an 

engineering  and  an  economic  point  of  view? 

20.  Are  there  any  experiments  being  carried  on? 

21.  Is  there  adequate  office-room? 


E.  Distribution 

1.  Is  the  town  level? 

2.  Are  the  streets  straight? 

3.  Is  there  much  foliage? 

4.  Was  blasting  necessary  in  setting  poles? 

5.  Is  there  an  underground  system?    (Give  length.)    If  so, 

what  policy  governs  its  installation? 

6.  Are  the  lines  extended  according  to  the  demand?   If  not, 

what  policy  governs  the  extension? 

7.  Are  extensions  promptly  made?   Has  favoritism  ever  been 

shown? 

8.  Do  the  customers  ever  bear  a  part  of  the  cost  of  extension? 

Frequently?  If  so,  how  is  the  cost  apportioned? 

9.  When  a  customer  pays  part  of  the  cost  are  the  construc- 

tion accoimts  written  up  proportionately,  or  is  this  item 
not  recorded? 

10.  What  proportion  of  the  poles  are  owned?    (Give  numbers.) 

11.  Is  pole  rental  paid?  If  so,  how  is  the  charge  carried? 

12.  What  seems  to  be  the  average  life  of  the  poles?  Of  lines? 

13.  How  is  the  length  of  lines  and  of  streets  with  overhead  lines 

determined? 

14.  Is  there  a  complete  map  of  the  distributing  system? 

15.  How  is  the  connected  load  determined?     (Distinguish  as 

to  light  and  power  load.) 

16.  What  percentage  of  current  is  used  at  station  and  un- 

accounted for? 

17.  What  reason  can  be  given  for  this  high  percentage  (if  total 

is  over  25  per  cent)  ? 

18.  In  general,  what  is  the  condition  of  the  distributing  system? 

19.  How  frequently  are  the  lines  inspected? 

20.  Is  a  careful  account  kept  of  distribution  tools? 

21.  Is  the  contract  or  "job"  system  used  in  making  extensions, 

or  is  the  direct  employment  method  followed? 

22.  Was  the  original  line  construction  satisfactory? 

23.  What  proportion  of  territory  and  of  population  is  served? 

24.  Are  small  customers  avoided? 


Remarks: 


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MUNICIPAL  ELECTRIC  LIGHTING 


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F.  Consumption 

1.  Are  customers'  meters  regularly  tested? 

2.  Are  customers'  complaints  promptly  attended  to? 

3.  How  are  complaints  handled? 

4.  Is  inside  work  done  by  the  company  (municipality)? 

5.  Are  appliances  sold?  Fixtures?  On  what  terms? 

6.  Are  special  rates  made  to  large  customers?  On  what  basis? 

7.  Is  there  general  satisfaction  (a)  with  the  rates?    (b)  with 

quahty  of  service? 

8.  How  often  are  street  lamps  patrolled? 

9.  How  often  are  accounts  collected? 

10.  Are  customers'  deposits  required? 

11.  Does  the  Department  collect  accounts? 

12.  Who  does  biUing? 

IS.  Have  rates  been  reduced  without  an  appeal  to  the  Com- 
missioners? 
14.  Enclose  rate  schedule. 


Remarks: 

G.  Financial  and  Miscellaneous 
(Questions  1  to  20  apply  in  the  main  to  municipal  plants  only) 

1.  Are  the  accounts  audited? 

(a)  How  often? 

(6)  Who  does  the  work? 

(c)  Who  bears  the  charge? 

2.  Is  service  rendered  to  other  municipal  departments  with- 

out compensation? 
S.  Is  service  secured  from  other  departments  without  com- 
pensation? 

4.  Is  payment  made  (in  case  of  municipal  plants)  for  street 

lighting?   For  ligliting  pubhc  buildingB?   For  municipal 
power? 

5.  Are  these  actual  payments  or  merely  nominal? 

6.  Is  city  water  paid  for  at  the  usual  rates? 

7.  Is  telephone  and  transportation  service  fully  paid  for? 

8.  Is  any  portion  of  salary  of  town  treasurer  or  of  the  soUcitor 

paid  for  (if  services  of  latter  are  used)? 


9.  Are  any  quarters  used  rent  free? 

10.  Is  any  land  not  carried  on  the  books  of  the  plant  used  rent 

free? 

11.  Is  the  police  and  fire  alarm  service  furnished  free? 

12.  Is  there  any  other  free  service? 

13.  Estimate,  by  items,  the  value  of  the  free  service  given  and 

received. 

14.  What  different  kinds  of  insurance  are  carried?  Who  pays 

the  premiums? 

15.  How  is  depreciation  provided  for? 

16.  Is  the  depreciation  fund  a  real  fund?   (Municipal  plants.) 

17.  Are  the  construction  accounts  considered  accurate? 

18.  Has  the  construction  or  maintenance  of  plant  been  financed 

to  any  extent  by  gifts  or  public  contributions? 

19.  If  so,  is  any  record  of  such  sums  kept  on  the  books? 

20.  If  the  plant  is  operated  in  connection  with  a  waterworks 

system  or  a  sewage  disposal  plant,  how  are  the  operating 
expenses  and  the  investment  apportioned. 

21.  What  is  the  approximate  investment  in  equipment  not  in 

use?    (Refers  particularly  to  plants  which  have  ceased 
generating.) 

22.  Has  there  been  waste  or  extravagance  in  investment?   In 

operation?   (Indicate  clearly.) 

23.  Has  the  financial  policy  been  over-conservative? 

24.  Is  a  clear  distinction  made  between  ordinary  repiurs  op 

maintenance,  renewals,  and  additions? 

25.  Has  the  normal  amount  of  new  construction  been  installed 

during  the  year  1910-17? 

26.  What  is  the  length  of  contract  for  municipal  lighting? 

What  are  the  terms? 

27.  How  much  is  exi)ended  for  advertismg  and  gettmg  new 

business? 

28.  What  check  is  there  on  financial  dishonesty? 

29.  Criticism  of  accounts. 

80.  Enclose  latest  annual  report  of  the  department  (municipal 
plants). 


Remarks: 


Signature 


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The  next  step  was  to  prepare  the  way  for  the  personal 
visit.  This  was  done  in  the  case  of  the  municipal  plants 
by  means  of  letters  to  the  manager  and  to  the  chairman 
of  selectmen  or  the  mayor,  and  sometimes  to  the  chairman 
of  the  municipal  light  board.  In  dealing  with  the  private 
plants  it  was  necessary  to  follow  different  methods,  de- 
pending upon  the  nature  of  the  ownership  in  each  case. 
For  the  plants  independently  owned  and  operated,  letters 
were  sent  to  the  managers  or  superintendents  and  to  one 
of  the  active  officials  of  the  company.  When,  however, 
the  plants  were  controlled  by  groups  of  investors,  it  be^ 
came  necessary  first  to  get  in  touch  with  the  recognized 
officials  of  these  groups  or  with  their  general  managers, 
and  through  them  to  take  up  the  matter  with  the  local 
managers  or  superintendents.  In  addition,  letters  were 
also  sent  to  the  chief  municipal  officials  as  in  the  case  of 
the  publicly  owned  plants. 

The  following  is  a  sample  of  the  usual  form  of  letter 
used,  which  was  varied  in  details  to  suit  the  different 
cases: 

Dear  Sir: 

As  a  member  of  the  Department  of  Economics  of  Harvard 
University,  I  have  been  making  a  detailed  study  of  municipally 
owned  electric  light  and  p)ower  plants  in  the  State  of  Massachu- 
setts. In  order  to  make  this  study  more  conclusive  I  have  se- 
lected a  number  of  private  plants  which,  chiefly  by  reason  of  their 
size,  may  fairly  be  used  for  purposes  of  comparison.  The  local 
plant  happens  to  be  on  my  hst. 

My  work  has  until  recently  been  confined  largely  to  an 
examination  and  interpretation  of  the  annual  returns  submitted 
to  the  Board  of  Gas  and  Electric  Light  Commissioners.  With  a 
view  to  testing  my  conclusions,  however,  I  find  it  highly  desirable 
to  make  a  personal  survey  of  the  plants  and  districts  which  I 

have  been  studying.  I  hope  to  come  to ,  in  a  short  time,  and 

trust  that  you  will  give  me  an  opportunity  to  discuss  with  you 
the  local  situation,  and  to  visit  your  plant,  etc. 

It  may  be  well  to  state  in  this  comiection  that  I  represent  no 
special  interests  in  this  matter,  and  am  wholly  free  from  prejudice 
either  for  or  against  municipal  ownership.  As  a  student  of  public 


affairs  I  simply  wish  to  find  out  as  nearly  as  possible  the  actual 
conditions,  in  so  far  as  they  have  a  bearing  upon  the  general 
problem.  All  information  of  a  private  nature  will  be  treated  as 
strictly  confidential,  and,  should  I  eventually  decide  to  publish 
the  results  of  this  study,  the  condition  of  individual  plants  will 
not  be  disclosed. 

Hoping  to  have  the  pleasure  of  meeting  you  soon. 

Yours  very  truly 


After  these  preliminaries  there  remained  simply  the 
task  of  getting  in  touch  with  the  local  parties.  When  it 
did  not  seem  necessary  to  visit  a  purchasing  plant  because 
of  its  smallness,  or  when  it  was  impossible  to  do  so,  a 
schedule  was  enclosed  to  be  filled  out  by  the  different 
parties  in  so  far  as  it  might  be  applicable  and  so  far  as 
their  knowledge  of  the  situation  might  go.  In  the  case  of 
the  centrally  controlled  companies  schedules  were  also 
filled  out  at  the  general  office. 

It  must  not  be  inferred,  however,  that  the  writer  merely 
visited  these  plants  and  discussed  the  general  situation 
with  the  officials  and  with  the  municipal  authorities.  In 
addition,  whenever  there  seemed  to  be  any  reasonable 
chance  for  error,  or  when  the  facts  were  still  in  doubt, 
and  sometimes  mainly  with  a  view  to  satisfying  a  pardon- 
able curiosity  regarding  diverse  opinions,  other  parties 
were  consulted,  including  the  employees,  business  men, 
representative  citizens,  officials  of  competing  gas  com- 
panies, and  central  station  men  in  adjoining  territories. 
Finally,  it  was  often  instructive  to  discuss  such  matters 
with  officials  of  neighboring  municipalities  and  with 
public  utility  men  who  had  business  interests  in  the 
various  localities. 

The  information  thus  secured  through  different  chan- 
nels, properly  analyzed,  duly  tested  according  to  the 
source  of  the  evidence,  and  interpreted  in  the  fight  of  the 
already  known  data,  in  the  most  important  particulars 
affords  highly  significant  and  really  dependable  confirma- 


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MUNICIPAL  ELECTRIC  LIGHTING 


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tion  of  the  tentative  conclusions  which  had  previously 
been  reached  by  the  writer. 

All  of  the  eighteen  municipal  plants  which  were  in  1915 
generating  some  current  were  visited,  together  with  ten 
of  the  more  important  generating  companies.  For  four 
other  companies  of  this  group  carefully  filled  schedules 
were  secured,  either  locally  or  from  the  central  office. 
Thus  definite  and  dependable  information  was  obtained 
regarding  thirty-two  of  the  thirty-five  generating  plants 
studied. 

Though  it  did  not  seem  necessary  to  make  so  careful  a 
survey  of  those  plants  which  are  merely  distributing  their 
current,  yet  the  writer  visited  five  or  six  of  the  larger  mu' 
nicipal  plants,  and  has  secured  schedules  or  other  definite 
information  from  the  majority  of  those  remaining.  In 
most  cases  also  the  local  situation  was  carefully  discussed 
with  men  who  had  been  on  the  ground,  so  that  there  seems 
to  be  little  opportunity  for  error  in  drawing  conclusions. 
Beyond  a  doubt,  however,  it  was  more  difficult  to  ob- 
tain the  desired  data  regarding  these  little  plants  than 
in  the  case  of  the  corresponding  group  of  companies. 
Of  the  latter,  two  of  the  larger  were  visited,  and  the 
territory  served  by  several  of  the  others  was  passed 
through,  while  schedules  and  other  satisfactory  informa- 
tion were  secured  for  fifteen  out  of  the  sixteen  plants  in 
this  group. 

In  this  connection  it  is  but  just  for  the  writer  to  state 
that  he  was  highly  gratified  by  the  candor  and  considera- 
tion with  which  he  was  received  by  all  while  making  this 
survey.  Each  municipal  Ughting  manager  was  uniformly 
courteous,  giving  generously  of  his  time  whenever  it  was 
asked  for,  placing  absolute  confidence  in  the  integrity  of 
the  writer,  and  frequently  revealing  facts  regarding  the 
conduct  of  his  plant,  which,  though  most  useful  to  the 
investigator,  might  have  proved  somewhat  disastrous  if 
divulged. 


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As  the  present  study  has  to  do  primarily,  not  with  pub- 
lic utilities  in  general,  but  merely  with  those  which  are 
municipally  owned,  it  was  to  be  expected  that  the  com- 
panies would  exercise  some  degree  of  caution  before  giving 
a  warm  welcome  to  an  investigator  who  weis  not  at  the 
time  connected  with  any  business  enterprise.  It  must  also 
be  remembered  that  the  first  duty  of  the  officials  of  a  cor- 
poration is  to  guard  well  the  interests  of  its  owners  —  the 
stockholders.  And,  finally,  no  individual  connected  with 
a  privately  owned  plant  occupies  the  unique  position  of 
almost  absolute  authority  enjoyed  by  the  manager  of  a 
municipal  plant;  hence,  it  would  naturally  be  more  diffi- 
cult to  get  in  touch  with  the  inner  conditions  of  the  for- 
mer, particularly  during  the  present  unsettled  times.  Yet 
the  greatest  consideration  was  constantly  manifested  by 
officials  of  the  various  companies,  who  afforded  the  writer 
every  facility,  permitting  him  not  only  to  inspect  their 
plants,  but  also  their  records  if  he  so  desired.  In  only  one 
instance  was  he  refused  admission  to  a  generating  plant, 
and  that  refusal  was  due  to  a  misunderstanding  rather 
than  to  any  active  antagonism. 

Upon  the  whole,  the  writer  was  delightfully  surprised 
at  the  unusual  interest  displayed  in  this  survey  when  its 
purpose  was  explained.  Particular  mention  should  also 
be  made  of  the  management  of  the  numerous  centrally 
controlled  companies,  who  almost  invariably  showed  a 
more  intelligent  and  helpful  appreciation  of  the  present 
work  and  its  difficulties  than  was  manifested  by  some 
of  the  officials  of  locally  owned  companies.  The  gen- 
eral spirit  which  prevailed  may  best  be  indicated  by 
the  three  letters  following,  one  from  the  mayor  of  a 
city,  the  second  from  the  manager  of  a  municipal  plant, 
and  the  last  one  from  the  president  of  a  number  of 
companies: 


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Dear  Sir: 

Your  communication  of 


July  20,  1917 

—  is  at  hand.  We  are  always  glad 
to  discuss  our  municipal  plant  with  anybody.  The  Manager  will 
extend  to  you  every  courtesy  on  your  visit  here,  and  I  shall  be 
glad  to  have  you  call  upon  me. 

Very  truly  yours 


Mayor 


Dear  Sir: 
Yours  of 


July  24,  1917 

—  is  at  hand.  I  desire  to  say  in  reply  thereto  that 
it  will  give  me  a  great  deal  of  pleasure  to  have  you  examine  our 
plants  at  any  time  that  is  convenient  for  you,  and  to  give  you 
any  information  that  you  may  desire.  ...  If  you  will  kindly  ad- 
vise a  day  or  two  in  advance  of  your  coming,  I  will  arrange  to 
meet  you  and  spend  as  much  of  the  day  with  you  as  you  may 
require. 

Yours  very  truly 


My  dear  Sir: 
I  have  your  letter  of 


Manager 


Augugt  2,  1917 


in  regard  to  the  investigation  which 


you  are  making  of  municipally  owned  electric  light  plants  in  the 
state.    We  shall  be  very  glad  to  have  you  inspect  the  property 

of  the Company,  and  we  are  ready  to  place  at  your  disposal 

all  the  records  of  the  company  and  such  books  and  accounts 
as  you  care  to  consult. 

The  subject  of  municipal  ownership  is  one  in  which  every 
manager  of  a  privately  owned  company  should  be  keenly  inter- 
ested. I  shall  be  very  grateful  to  you  for  any  light  which  you  may 
be  able  to  throw  upon  the  subject,  and  shall  be  glad  to  cooper- 
ate with  you  in  every  way  to  make  your  investigation  as  search- 
ing as  possible.  If,  when  your  investigation  is  completed,  the 
results  of  it  are  to  be  published,  I  should  like  to  have  a  copy. 

Yours  very  truly 


Presideni 


CHAPTER  XI 

THE  LOCAL  BACKGROUND:  GENERATING  PLANTS 

From  time  to  time,  whenever  it  served  to  clear  up  ob- 
scure or  doubtful  points  and  usually  whenever  it  was  rela- 
vant,  reference  has  been  made  in  the  preceding  chapters 
to  certain  portions  of  the  information  secured  in  the  local 
survey.  This  part  of  the  work,  however,  was  done  last  in 
point  of  time,  as  logically  it  should  be,  and  we  are  here 
primarily  concerned  with  a  less  readily  measurable  kind 
of  material  than  that  which  has  been  handled  in  the  earlier 
stages.  Hence,  not  only  does  clearness  of  presentation 
demand  that  these  different  data  be  kept  separate,  but 
also  the  writer  feels  that  by  so  doing  he  can  put  his  case 
more  strongly  and  can  best  appeal  to  the  sense  of  fairness 
of  his  readers. 

The  writer  was  in  no  way  influenced  by  his  previous 
findings  during  this  aspect  of  the  investigation.  On  the 
contrary,  he  merely  made  use,  when  necessary,  of  certain 
imdoubted  facts  with  which  he  was  already  familiar,  for- 
getting for  the  time  being  any  tentative  conclusions  which 
he  might  have  reached.  And  now,  when  all  of  these  addi- 
tional data  are  assembled,  they  can  be  the  more  readily 
interpreted  because  of  the  previous  studies,  and,  inasmuch 
as  they  point  to  similar  conclusions,  the  reader  can  rest 
assured  that  he  has  not  been  led  astray  by  the  statistical 
analyses.  Needless  to  state,  it  will  not  be  necessary  to 
discuss  all  of  the  questions  appearing  upon  the  schedule, 
as  many  of  them  overlap  and  some  are  of  slight  impor- 
tance when  considered  alone.  Also,  to  avoid  confusion, 
an  effort  will  be  made  to  adhere  to  the  order  of  treatment 
followed  in  the  earlier  chapters  rather  than  to  the  arrange- 
ment given  in  the  schedule.   As  all  information  was  im- 


m\ 


soo 


MUNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


801 


parted  in  confidence,  the  names  of  individual  plants  will 
not  be  disclosed  in  this  connection.  The  plants  generat- 
ing current  in  1915  will  accordingly  be  discussed  first. 

1.  The  Central  Station 

It  is  rather  difficult  to  make  brief  comparisons  of  the 
central  stations  and  their  equipment  which  will  not  prove 
misleading.  What  is  suitable  in  one  place  may  not  be 
suitable  in  another.  Circumstances  frequently  alter  cases. 
Accordingly,  depending  as  much  as  possible  upon  the  state- 
ments of  local  officials  rather  than  attempting  to  set  up  any 
arbitrary  standards  of  his  own,  the  writer  has  endeavored 
to  pass  upon  each  case  as  neariy  as  may  be  separately 
and  to  consider  it  in  relation  to  the  local  conditions.  In 
the  case  of  plants  which  have  ceased  to  generate  current, 
the  equipment  will  be  discussed  as  it  was  in  1915,  provided 
it  has  not  already  been  removed. 

In  general  it  appeared  that  the  boiler  rooms  of  the  com- 
panies were  kept  in  better  order  and  the  steam  pipes  in 
a  more  satisfactory  state  of  repair.  They  also  in  many 
cases  provided  more  convenient  facilities  for  receiving 
and  handhng  coal,  though  but  a  few  plants  in  either  group 
were  equipped  with  automatic  stokers.  The  companies 
further  had  more  adequate  boiler  cajmcity,  whereas  a 
very  frequent  complaint  of  the  public  plants  was  that 
they  had  reached  their  limit  and  that  service  would  have 
to  be  suspended  if  any  accident  should  occiu*.  The  em- 
ployees of  the  latter  also  reported  many  boiler  troubles, 
and  the  chimneys  were  frequently  too  small  to  give  ade- 
quate draft.  COjj  recorders  and  economizers  were  for  both 
groups  usually  conspicuous  by  reason  of  their  absence. 

The  earlier  statement  to  the  effect  that  the  units  of  the 
municipal  plants  are  noticeably  older  than  those  of  the 
companies  was  very  evident  upon  examination.  It  was 
also  discovered  that  this  difference,  particularly  in  so  far 
as  the  engines  and  dynamos  are  concerned,  is  frequently 


much  greater  even  than  the  returns  would  seem  to  indi- 
cate, for  in  many  instances  they  have  installed  second-hand 
apparatus  —  a  fact  which  is  naturally  not  disclosed  in 
the  records.  The  most  extreme  case  of  this  sort  which 
came  to  the  notice  of  the  writer  was  one  in  which  an  en- 
gine that  had  been  scrapped  by  an  adjoining  company 
about  fifteen  years  earher,  was  recently  installed  in  a 
municipal  plant,  having  been  purchased  practically  at  its 
junk  value.  Thus  the  capital  account  was  kept  down  and 
a  good  investment  showing  made  for  the  year. 

An  obvious  advantage  seemed  to  lie  with  the  compa- 
nies in  the  matter  of  generating  equipment,  which,  in  all 
cases  except  one  (out  of  fourteen),  might  be  rated  as  "ex- 
cellent," "good,"  or  "fair,"  whereas  for  the  municipal 
plants  at  least  eight  would  have  to  be  referred  to  as  "poor" 
or  "very  old."  In  justice,  however,  it  must  be  stated  that 
some  of  the  latter  had  purposely  refrained  from  renewing 
or  replacing  their  equipment  because  they  were  merely 
waiting  for  a  good  opportunity  to  purchase  current.  On 
the  other  hand,  several  have  undoubtedly  been  forced  to 
stop  generating  because  their  equipment  had  become  so 
run  down  and  antiquated  that  an  entire  new  investment 
would  have  been  necessary.  Of  this  more  mention  will 
be  made  shortly.  As  to  whether  the  stations  in  general 
are  "up-to-date,"  the  answer  would  be  "yes"  or  "fair" 
for  most  of  the  companies  and  decidedly  **m)^^  for  at  least 
half  of  the  other  group.  One  of  the  municipal  plants  is 
operating  single-phase  and  three  or  four  still  use  the  two- 
phase  system. 

Regarding  the  testing  of  station  meters,  it  was  found 
that  while  practically  all  of  the  companies  had  regular 
tests  at  intervals  varying  from  three  months  to  one  year, 
half  of  the  public  plants  reported  "indefinite"  or  "when 
needed,"  and  one  frankly  stated  "never."  One  of  the 
latter,  and  until  recently  one  of  the  former,  has  no  means 
whatever  of  determining  the  station  output.    As  the  chief 


90% 


MUNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


SOS 


en^neer  says,  they  make  their  current  "by  guess  and  by 
God."  It  was  also  noticeable,  and  to  be  expected,  that 
those  municipalities  which  are  purchasing  their  current 
from  private  concerns,  are  considerably  more  careful  in 
this  matter  than  they  were  while  producing  their  own 
current.  Practically  none  of  the  municipal  plants  and 
comparatively  few  of  the  others  were  equipped  with  maxi- 
mum demand  indicators,  and  many  of  the  switchboards 
of  the  former  were  antiquated,  inconveniently  placed, 
and  even  dangerous. 

A  good  many  improvements  had  been  made  by  both 
groups  since  1915,  a  number  of  new  turbines  having  been 
installed,  while  one  of  the  companies  has  constructed  a 
magnificent  new  station,  which,  of  its  size,  is  undoubtedly 
the  best  in  the  State. 

While  it  is  difficult  to  make  comparisons  of  what  may 
be  termed  the  "housekeeping"  of  the  plants,  due  in  some 
measure  to  the  fact  that  considerations  of  space  may  affect 
the  situation,  yet  the  writer  ended  his  investigation  with 
a  distinct  impression  that  in  general  the  conditions  were 
appreciably  better  in  the  companies,  in  several  of  which 
the  only  proper  designation  would  be  "excellent." 

There  was  Httle  to  criticize  as  to  the  ventilation  of  the 
private  stations,  but  at  least  half  of  the  other  group  must 
be  said  to  have  "poor,"  or  at  most  only  "fair  "  ventila- 
tion. While  it  might  be  expected  that  the  State  inspec- 
tors would  see  to  it  that  adequate  provisions  are  made  for 
the  safety  of  employees,  yet  the  writer  was  somewhat 
surprised  to  find  that  in  many  of  the  municipal  plants 
the  switchboards  are  unprotected,  and  in  some  cases 
crowded  so  close  to  the  wall  that  there  is  scarcely  room 
for  the  operator  to  pass.  Much  of  the  apparatus  in  the 
older  and  more  crowded  plants  of  this  group  is  a  constant 
source  of  danger  to  the  employees. 

The  companies  almost  without  exception  have  roomy 
stations  and  plenty  of  office  space.    Of  the  municipal 


plants,  however,  several  stations  are  so  small  and  con- 
gested that  conditions  are  highly  unpleasant  for  the 
employees,  nor  are  they  large  enough  to  permit  the  in- 
stallation of  much  needed  equipment.  There  is  absurdly 
insufficient  office  room  in  six  or  seven  of  the  latter,  and 
in  several  cases  the  office  is  located  at  the  station  itself  in 
a  place  highly  inconvenient  for  the  public. 

So  far  as  the  location  of  the  central  station  is  concerned, 
it  is  "  unsatisfactory  "  or  "  doubtful "  in  three  of  the  ten  com- 
panies visited,  while  for  the  other  group  it  is  obviously 
"unsatisfactory"  in  at  least  five  cases  and  "doubtful" 
in  several  more.  This  state  of  affairs  is  in  some  measure 
accounted  for  by  the  fact  that  most  of  the  five  munic- 
ipalities operating  their  water  system  in  connection  with 
their  lighting  plants,  had,  for  the  sake  of  economy  in  in- 
vestment, installed  the  latter  in  the  premises  occupied  by 
the  former,  with  no  thought  of  the  inconveniences,  diffi- 
culties, or  increased  operating  expenses  which  might 
thereby  be  involved. 

The  answers  to  the  question  regarding  the  adequacy 
of  plant  for  the  present  and  the  immediate  future,  fur- 
nish a  highly  significant  commentary  upon  some  of  the 
problems  of  pubUc  ownership.  Taking  both  groups  as 
they  were  in  1915,  it  appears  that  at  least  three  of  the 
companies  were  inadequate  and  as  many  more  in  a 
doubtful  condition.  But  of  the  municipal  plants  at 
least  ten  were  obviously  inadequate,  whether  because 
of  antiquated  equipment  or  by  reason  of  insufficient 
capacity,  while  three  or  four  others  occupied  a  doubtful 
position. 

Hence  it  is  not  strange  to  find  that  some  two  years 
later  three  private  plants  and  seven  public  plants  have 
ceased  to  generate  their  current  —  though  some  of  them 
are  keeping  their  equipment  in  condition  to  use  in  case 
of  emergencies.  Two  other  municipal  plants  are  at  pres- 
ent seriously  considering  the  same  step,  while  two  addi- 


904 


MUNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


305 


1 


tional  ones  which  were  on  the  point  of  buying  all  of  their 
current,  have,  in  the  one  case  because  of  a  false  local  pride, 
and  in  the  other  because  of  unbusinesslike  methods  fol- 
lowed in  attempting  to  negotiate  a  contract  for  the  pur- 
chase of  current,  been  compelled  to  continue  the  business 
of  generation.  Of  the  remaining  plants  of  each  group  only 
five  or  six  in  either  case  assert  definitely  that  it  is  desir- 
able to  continue  to  produce  current,  the  reason  given  in 
some  instances  being  that  they  are  not  at  present  within 
reach  of  a  selling  company.  The  recent  rapid  develop- 
ment of  hydro-electric  plants  has,  however,  marked  the 
end  of  profitable  steam  generation  by  any  but  the  largest 
plants. 

Of  the  companies  ceasing  to  make  their  current,  one 
obviously  did  so  because  of  the  great  investment  which 
would  have  been  necessary  to  put  the  plant  in  proper 
shape,  another  because  of  the  high  cost  of  coal,  and  the 
third  largely  because  its  owners  were  also  interested  in 
some  water-power  development  which  they  wished  to 
utilize.  Four  or  five  of  the  other  group  ceased  generating 
for  the  most  part  because  of  the  greatly  increased  invest- 
ment which  would  have  been  necessary  to  enable  them 
to  give  satisfactory  service,  while  the  others  seem  to  have 
been  influenced  most  by  the  high  cost  of  fuel.  All  of  the 
companies  and  three  of  the  municipaUties  are  buying 
current  generated  by  water  power. 

Four  or  five  of  the  remaining  municipal  plants  will  be- 
fore long  be  forced  to  double  their  investment  in  order 
to  give  the  service  which  the  people  are  demanding  and 
have  a  right  to  expect.  In  fact  the  largest  plant  of  this 
group  in  the  State  is  seriously  considering  the  advisabil- 
ity of  installing  a  thoroughly  new  station  at  a  cost  of 
probably  more  than  $2,000,000.  The  development  of  the 
territory  is  such  that  this  step  will  soon  be  necessary  un- 
less current  is  to  be  purchased  from  one  of  the  hydro- 
electric companies;  for  the  original  station,  taken  over 


from  a  private  concern,  is  from  nearly  every  point  of  view 
at  present  highly  unsatisfactory. 

That  so  many  pubUc  plants  are  scrapping  their  station 
equipment  is  by  no  means  a  sufficient  reason  for  condemn- 
ing the  proposition  of  municipal  ownership  in  general. 
Rather,  the  management  is  probably  displaying  excellent 
judgment  in  ceasing  to  do  what  can  be  more  cheaply  done 
by  private  enterprise.  Whether  under  public  or  under 
private  ownership,  the  day  of  the  small  generating  plant 
is  passed.  But  the  rather  unpleasant  fact  remains,  that 
the  progress  of  the  art,  making  possible  the  satisfactory 
transmission  of  current  over  long  distances,  has  brought 
it  about  that  the  municipal  plants  of  Massachusetts  will 
be  burdened  with  hundreds  of  thousands  of  dollars  of 
investment  in  dead  assets,  upon  which  they  will  in  most 
cases  continue  to  pay  interest  for  many  years.  This  in- 
vestment, together  with  the  interest  paid  thereon,  should 
be  compounded  regularly,  divided  by  the  number  of  years 
during  which  a  given  plant  was  operated,  and  then  appor- 
tioned to  the  annual  amount  of  current  used  for  street 
lighting,  —  or  also  added  to  the  commercial  rates,  if  they 
were  lower  than  those  which  would  have  been  charged  by 
a  private  plant,  —  provided  one  really  wishes  to  know 
something  about  the  cost  of  service  under  municipal  owner- 
ship. The  "long  run"  must  always  be  considered  when 
large  issues  are  studied. 

2.  Distribution 

While  an  attempt  was  made  to  select  plants  which  are 
operating  as  nearly  as  may  be  under  topographically  simi- 
lar conditions,  yet  it  was  found  upon  actual  visitation 
that  in  a  large  number  of  cases  the  companies  are  located 
in  places  where  the  surface  is  hilly,  the  streets  irregular, 
the  soil  rocky,  and  the  foliage  unusually  abundant,  where- 
as the  conditions  existing  in  the  other  group  were  gener- 
ally decidedly  more  favorable.   The  rocky  or  excessively 


"ir 

II 


IP 


S06 


MUNICIPAL  ELECTRIC  LIGHTING 


irregular  condition  of  the  ground  makes  the  installation 
of  poles  a  more  expensive  undertaking,  and  with  a  greater 
amount  of  foliage  the  cost  of  upkeep  of  lines  is  much  in- 
creased as  well  as  the  difficulty  of  lighting  the  streets.  In 
these  regards,  accordingly,  the  public  plants  would  seem 
to  have  a  considerable  advantage.  (The  reader  will  also 
recall  that,  as  shown  in  an  earher  chapter,  the  companies 
are  serving  a  much  more  scattered  population  than  are 
the  municipal  plants,  and  that  they  are  reaching  for  the 
most  part  a  greater  projwrtion  of  the  inhabitants.) 

In  dealing  with  the  distributing  system  it  was  a  diffi- 
cult matter  to  discover  how  many  poles  are  owned  out- 
right and  how  many  are  jointly  owned  or  merely  used  for 
attachments,  for  not  until  the  present  year  did  the  annual 
returns  made  to  the  State  Board  definitely  require  such 
information.  However,  as  it  has  been  suggested  in  the 
chapter  on  physical  statistics,  the  companies  appear  to 
own  a  much  larger  proportion  than  do  the  municipal 
plants.  Joint  ownership  is  common  to  both  groups,  and 
some  rentals  are  paid  by  both  —  more  frequently  by  the 
companies.  There  are  other  arrangements  of  joint  or  com- 
plete maintenance,  and  sometimes  municipalities  seem 
to  regard  and  use  as  public  property  any  poles  which  have 
been  placed  in  the  streets  by  private  concerns.  Upon  the 
whole  the  pubhc  plants  have  a  decided  advantage  over 
private  plants  in  this  matter,  for  under  the  police  powers 
of  municipal  corporations  they  can  do  what  they  please 
with  the  poles  for  which  a  location  has  been  granted,  or, 
on  the  other  hand,  the  authorities  may  refuse  to  grant 
locations  until  they  have  secured  the  concessions  which 
they  may  wish.  In  general  the  managers  of  municipal 
plants  seem  to  endeavor  to  keep  on  good  terms  with  the 
other  pubhc  utihties  in  this  matter,  but  the  fact  still  re- 
mains that  they  desire  to  avoid  expense  under  this  head. 
It  is  unnecessary  to  weary  the  reader  further  with  the  de- 
tails of  the  various  forms  of  agreement  which  are  entered 


IN  MASSACHUSETTS 


307 


into,  except  to  say  that  nearly  every  plant  handles  the 
problem  in  a  different  way.^ 

Only  three  of  the  municipal  plants  state  that  they  feel 
practically  certain  of  the  length  of  their  lines,  having  actu- 
ally measured  them.  Four  others  report  that  they  have 
merely  scaled  the  "streets  with  overhead"  from  blue- 
prints of  the  city  engineer,  without  attempting  anything 
further;  while  the  remainder  simply  indicate  that  the 
"length  of  street  lines"  returned  is  built  up  upon  the 
earher  estimates  and  records,  and  that  it  is  beyond  a  doubt 
no  more  than  a  rough  approximation.  Practically  all  of 
the  companies  report  that  the  length  of  their  hues  is  deter- 
mined by  actual  measurement.  Only  eight  of  the  eighteen 
municipal  plants  appear  to  have  more  or  less  satisfactory 
maps  of  their  distributing  systems,  but  almost  all  of  the 
private  plants  seem  to  be  reasonably  well  equipped  in  this 
regard. 

As  to  the  condition  of  the  distributing  system  in  gen- 
eral, it  appeared  to  be  for  the  most  part  "good,"  though 
in  a  few  cases  only  "reasonably  satisfactory,"  for  all  of 
the  companies  from  which  information  was  secured.  Sev- 
eral of  the  municipal  plants  have  line  construction  much 
below  the  standard  both  in  the  size  and  quality  of  poles 
and  in  the  size  of  wire,  while  the  condition  of  the  rest  is 
about  equally  divided  between  "good"  and  "fair."  In 
five  or  six  of  this  group  the  original  construction  was 

*  Naturally  many  of  the  agreements  are  so  vague  that  much  confu- 
sion might  result.  Among  other  amusing  instances  occurring  in  this  con- 
nection, the  writer  was  told  of  a  case  in  which  the  town  was  supposed  to 
own  the  alternate  poles,  the  rest  belonging  to  the  street  railway  com- 
pany. On  one  occasion  a  valuable  horse  ran  away  and  killed  himself  by 
bumping  into  one  of  the  poles  which  was  not  properly  located  on  the 
street.  The  owner  sued  the  town  for  damages.  Then  the  question  arose 
as  to  whose  pole  it  really  was  that  killed  the  animal.  The  company  began 
to  count  in  one  place  and  maintained  that  the  town  owned  the  guilty 
pole;  the  town  began  its  count  elsewhere,  and  accused  the  company's 
pole.  Finally,  after  much  litigation,  the  matter  was  compromised  by 
each  party  paying  half  of  the  damages. 


806 


MUNICIPAL  ELECTRIC  LIGHTING 


|. 


dearly  unsatisfactory;  but,  so  far  as  could  be  ascertained 
there  had  been  no  particular  complaint  about  this  point 
in  the  case  of  the  companies.  In  the  matter  of  line  in- 
spection, according  to  the  statement  of  officials,  there 
seems  to  be  little  to  choose  between  the  two  groups,  ex- 
cept that  four  public  plants  report  no  definite  or  regular 
inspection.  The  others  for  the  most  part  report  "con- 
stant" inspection,  and  in  some  instances  "monthly," 
"semi-yearly,"  "yearly,"  or  "after  storms." 

The  connected  Ughting  load  in  both  cases  seemed  to  be 
more  or  less  roughly  estimated,  though  some  take  the 
trouble  to  make  frequent  house  inspections  in  order  to 
determine  the  customer's  maximum  demand.  The  com- 
panies apparently  exercised  the  greater  care  in  keeping 
track  of  their  power  load. 

There  seems  to  have  been  some  reduction  in  the  amount 
of  "ciurent  unaccounted  for"  since  1915,  though  in  sev- 
eral of  the  municipal  plants  it  was  still  very  high.  Part  of 
the  difference  between  the  two  groups  can  be  axx»unted  for 
by  the  use  of  too  small  wire,  tree  contacts,  old  meters  and 
transformers,  and  small  transformers.  (As  stated  in  an 
earlier  chapter,  the  transformers  of  the  companies  aver- 
age about  8  per  cent  larger  than  those  of  the  municipal 
plants.)  It  was  also  significant  to  learn  that  some  of  the 
companies  which  of  necessity  used  numerous  small  trans- 
formers because  of  their  large  lighting  business  occasioned 
by  simamer  customers,  follow  the  practice  of  "cutting 
out"  these  transformers  during  the  winter  months  when 
they  are  not  needed,  thus  preventing  a  very  considerable 
loss  of  current.^ 

Furthermore,  the  irregularity  with  which  the  station 
meters  of  the  mmiicipal  plants  are  tested  may  account 
for  part  of  the  apparent  loss.  Also,  in  two  rather  impor- 
tant cases  the  writer  was  surprised  to  be  told  on  good 
authority  that  there  had  been  an  actual  "rigging"  of  the 
*  For  a  fuller  discussion  of  this  subject,  see  ch.  iv,  pp.  100-104. 


IN  MASSACHUSETTS 


S09 


transformers  and  meters  in  several  instances,  so  that  the 
customer  was  billed  a  much  smaller  amount  of  current 
than  he  had  actually  consumed.  Finally,  it  is  worthy  of 
note  that  the  public  plants  which  have  begun  to  buy  their 
current  have  greatly  reduced  their  "unaccounted  for." 
When  there  is  a  direct  outlay  for  every  kilowatt  hour 
used,  some  incentive  is  given  to  stop  the  more  common 
sources  of  loss. 

For  the  most  part  the  direct  method  of  employment 
was  followed  by  both  groups  in  making  extensions.  The 
policy  adopted  in  extending  lines  varies  more  or  less  ac- 
cording to  the  character  of  the  district  served.  Yet  six 
or  seven  public  plants  state  that  they  do  not  extend  accord- 
ing to  the  demand,  and  more  than  half  of  them  consider 
chiefly  the  probable  return  on  the  investment  necessi- 
tated, usually  requiring  a  minimum  guarantee  of  current 
consumed  amounting  to  20  or  25  per  cent  of  the  cost  of 
making  the  extension.  In  several  cases  known  to  the 
writer  political  considerations  have  beyond  a  doubt  caused 
long  extensions  to  be  made  which  were  certainly  not  jus- 
tified. But,  as  a  usual  thing,  the  managers  of  municipal 
lighting,  in  order  to  make  as  good  a  showing  for  the  year 
as  possible,  refuse  to  make  extensions  which  will  not  be 
clearly  profitable.  And  in  this  policy  they  are  probably 
justified,  for  the  aggrieved  party  can  have  the  matter 
voted  upon  at  the  town  meeting,  or  can  refer  it  to  the 
city  government,  in  which  case  he  may  be  sustained,  if 
his  cause  is  just,  —  or  if  he  has  sufficient  "pull,"  —  while 
otherwise  he  will  be  forced  to  go  without  service.  The 
State  law,  as  previously  discussed,  does  not  appear  to 
exercise  compulsion  over  municipalities  in  this  matter. 
Again,  the  prospective  customer  may  be  charged  part  or 
all  of  the  cost  of  making  the  extension,  at  any  rate  if  on 
private  land,  and  in  case  he  refuses  to  bear  this  cost  he 
can  be  denied  service.  While  there  is,  of  course,  the  re- 
mote possibility  of  securing  action  by  the  municipality. 


310 


MUNICIPAL  ELECTRIC  LIGHTING 


yet  the  outcome  in  either  of  these  cases  usually  is  that 
extensions  are  by  no  means  promptly  made  and  that  small 
customers  are  discouraged  unless  they  happen  to  be  con- 
veniently located. 

The  companies  for  the  most  part  maintain  that  they 
make  extensions  according  to  the  demand,  though  they 
try  to  secure  a  reasonable  minimum  guarantee  whenever 
possible.  This  guarantee  was  usually  found  to  be  consid- 
erably lower  than  in  the  case  of  the  public  plants.  They 
also  sometimes  charge  up  part  of  the  cost  of  extension  to 
the  customer,  or  let  him  pay  for  the  transformer  or  for  his 
meter.  But  as  a  rule  their  policy  is,  and  from  the  very 
nature  of  the  case  must  be,  more  Hberal  than  that  of  the 
other  group,  for  there  is  no  buffer  between  them  and  the 
consumer  corresponding  to  the  town  meeting  or  the  mu- 
nicipal government.  Rather,  they  are  put  constantly  on 
the  defensive,  and  can  at  any  time  be  forced  by  the  State 
Board  to  furnish  service,  whether  they  will  or  no.  Hence,  in 
an  effort  to  avoid  the  disagreeable  publicity  and  the  ensuing 
prejudice  which  result  from  an  app)eal  to  the  Board,  they 
usually  endeavor  to  keep  the  people  satisfied.  Appeals  for 
extensions  have  been  comparatively  few  in  recent  years. 

3.  Consumption 

There  will  always  be  customers  who  are  afraid  that 
their  meters  are  registering  too  much  current,  and  who 
cause  those  in  the  Hghting  business  a  great  amount  of 
annoyance.  In  order  to  keep  the  peace,  for  according  to 
law  such  persons  can  complain  to  the  State  Board,  many 
companies  find  it  desirable  to  do  a  good  deal  of  really 
unnecessary  testing  of  meters.  It  is  also  probable  that  a 
certain  class  of  customers  are  naturally  more  suspicious 
of  a  private  concern  than  of  a  municipaUty.  At  any  rate, 
most  of  the  companies  report  regular  tests  at  reasonable 
intervals.  The  public  plants,  also,  though  seven  report 
"no  tests"  or  only  "upon  complaint,"  appear  to  be  giving 


IN  MASSACHUSETTS 


311 


more  attention  than  formerly  to  this  aspect  of  their  serv- 
ice. As  an  example  of  the  need  for  more  care  in  this  re- 
gard, the  case  of  a  large  municipal  plant  may  be  cited, 
which,  upon  a  change  of  management,  tested  all  of  the 
customers'  meters,  of  which  47  per  cent  were  found  to  be 
accurate,  7  per  cent  from  2  to  26  per  cent  fast,  and  the 
remaining  46  per  cent  from  2  to  100  per  cent  slow! 

Customers*  complaints  appear  to  be  reasonably  well 
attended  to  by  both  groups,  though  the  municipal  plants 
can  be  more  independent  in  the  matter,  and  the  manager 
frequently  can,  if  he  wishes,  hide  behind  the  municipal 
light  board  or  the  municipal  government.  Overlapping 
jurisdiction  in  such  cases  sometimes  causes  unwarranted 
delay  in  attending  to  complaints. 

All  of  the  companies  report  the  sale  of  appliances,  and 
several  sell  fixtures,  while  four  or  five  public  plants  sell 
few  appliances  or  none  at  all,  and  only  one  sells  fixtures. 
The  latter  are  much  handicapped  in  this  matter  because 
they  as  a  rule  have  little  or  no  display  room.  The  terms 
are  about  the  same  in  both  cases  —  "at  cost"  or  "near 
cost."  Some  of  the  companies,  however,  offer  liberal 
credit  in  order  to  push  the  use  of  various  devices,  and  thus 
increase  the  day  load.  The  pubHc  plants,  as  might  be 
expected,  are  not  usually  so  liberal  in  this  regard,  though 
the  largest  one  of  all  maintains  a  little  shop  where  house- 
hold appliances,  such  as  irons,  are  repaired  free  of  charge. 
The  manager  deems  it  more  advantageous  in  this  case  to  be 
constantly  selling  current  than  to  secure  the  usual  fees  for  re- 
pairs or  to  have  the  apphances  discarded  as  so  often  happens. 

Deposits  are  usually  required  in  both  groups  at  the  dis- 
cretion of  the  manager  or  from  tenants.  Accounts  are 
always  collected  monthly  by  the  companies;  but,  for  the 
lighting  customers  in  a  few  of  the  smaller  municipal  plants, 
at  intervals  of  two  or  even  three  months.  The  latter  in 
two  cases  also  make  large  use  of  prepayment  meters. 

In  a  few  cases  special  rates  are  made  to  large  consumers 


f 


312 


MUNICIPAL  ELECTRIC  LIGHTING 


of  power,  but  for  the  most  part  the  usual  schedules  are 
followed.    All  of  the  municipaUties  report  general  satis- 

Table  56.  Petitions  of  Municipal  Government,  Citizens, 
OR  Consumers  regarding  Price  or  Quality  of  Service 

SINCE  1910,  AND  action  OF  StATE  BoARD  THEREON  ^ 


Nam4 

DaU 

Petition 

AcHtm  of  hoard 

h  Private  plants : 

A.  G«aerating  — 

BdTsrly •••• 

1910 

Board  does  not  sustain 

consumer's    petition 

for  reduction  in  price 

1914 

Petition  of  mayor  for 

No  action,  but  rate  re- 

reduction in  price 

duced  in  1916  from 
11^  to  10^ 

Newboryport 

1910 

Reduction  in  maximum 
net  rate  ordered  from 
15^  to  14^ 

1912 

"j  Petition  of  consumers 
1     for  reduction  in  prioe 

1913 

y                do. 

No  action 

1914 

do. 

1916 

]                do. 

North  AdamB 

1910 

Petition  of  consumers 
for  reduction 

1911 

Reduction  ordered  from 
13.6^  to  12.6^ 

HorthamptOQ 

1913 

Petition  of  mayor  for 
reduction  in  price 

1914 

Reduction  ordered  from 
14^  to  9^ 

1910 

Petition  of  selectmen 

regarding      quality 

and  prioe 

1911 

Reduction  ordered  in 
price  of  street  lights 

ilMllltfll .  , 

1913 
1914 
1916 

Petition  of  Board  of 
.      Trade  and   citiaens 
for     reduction     in 
price 

•No  action 

1916 

Petition  of  consumers 

for  investigation  of 

rates  and  service 

1916 

Board    for    noat  part 

B.  ParobMiiig  — 

Milford 

1914 

Petition  of  selectmen 

and  consun^rs  for 

reduction 

1915 

Reduction  ordared  from 

18^  to  14^ 

U.  Municipal  plantB : 

HuU 

1916 

Petition  of  consumers 

No  action;  but  rates  re- 

for reduction  in  price 

duced   in  1916  from 

and  improvement  in 

20^  and  16^  to  17^  and 

service 

W 

TMinton ......  r  T  t .  r 

1913 

Petition  of  citizens  for 
reduction  in  price 

No  action:  but  rate  re- 

duced  in    1914  from 

13^  to  9.9^ 

IN  MASSACHUSETTS 


313 


faction  with  the  rates  at  present,  while  a  few  of  the  com- 
panies admit  that  their  charges  are  considered  high.  Yet, 
within  the  last  seven  years,  as  shown  by  the  accompany- 
ing table  (56),  there  has  been  but  little  axitive  agitation 
for  reductions  in  price,  and  in  only  four  cases  out  of  the 
seven  listed  did  the  Board,  after  careful  deliberation,  sus- 
tain the  petitioners.  On  the  other  hand,  there  have  been 
within  the  period  numerous  voluntary  reductions  in  price. 

Table  57.  Voluntary  Reductions  in  MAXUfUM  Net  Com- 
BfERCiAL  Lighting  Rates  since  1910  (cents  per  K.W.H.) 


MunicipalUy 


1910 


1.  Generating  — 
Braintree . . 
Chicopee. . . . 
Concord .... 
Danvers .... 
Holyoke ... 
Hudson.. .. 

Hull 

Ipswich.... 
Mansfield . . 
Marblehead 
Merrimac .... 
Middlebor- 

ougb 

N.  Attlebor- 

ough 

Peabody 

Reading 

Taunton 

Wakefield.... 

Westfield 

n.  Purchaaing  — 
Aahbumham . 
Belmont.... 
Boylston. . . 
Georgetown.. 

Groton 

Groveland  . . . 
Hingbam  .... 

Holden 

Littleton 

Luneuburg. . . 
Middleton.... 

Norwood 

Paxton 

Princeton .... 

Rowley 

Shrewsbury  .. 
South  Hadley 

Sterling 

Templeton.. . . 
Wellesley .... 
West  Boylston 


1911 


10  to  9 


1912 


•  •  •  • 

•  •  •  • 


•  •  •  « 

•  •  •  • 
«  •  •  • 

«  •  •  * 


16  to  12 


1913 


12  to  10 


8to6 
15  to  10 


16toll.7 
12  to  11 


1914 


12  to  9.6 


1915 


1916 


I  •  •  • 
I  •  •  • 


12.35  to  11.7 
12.8  to  10.8 


10.8  to  10 
15  to  12 


t  Table  includes  only  the  groups  of  plants  studied. 


15  to  11 


«  •  •  • 

•  •  •  « 

•  •  •  • 


llto9 


15  to  13 


15  to  11 
10.8  to  10 


13.5  to  12 
11.7  to  10.8 

13to9.9 
15  to  12 
10to7 


12  to  11.2 


14.4  to  13.5 


10.8  to  9.9 


11.2  to  10 

•  •  •  • 

13.5toll.7 


9.6  to  9 


20  to  14 
10.8  to  10 


12  to  10 


•  •  •  •  * 


10to9 


13  to  10.8 


9  to  8.5 


15  to  12.5 


12  to  11 


13.5  to  11.7 


t  Increased  in  1917  to  9  cents. 


f. 


S14 


MUNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


315 


amounting  to  twenty-four  instances  in  fourteen  different 
generating  plants.  The  writer  has  also  been  informed  of 
two  or  three  additional  reductions  which  have  taken  effect 
recently.  Thus  the  total  number  of  price  reductions  ap- 
pears to  have  been  at  least  thirty.  The  corresponding 
group  of  municipal  plants  have  in  the  same  period  also 
made  twenty  voluntary  reductions  in  price  in  fifteen  dif- 
ferent plants,  while  two,  at  least,  have  been  forced  from 
financial  reasons  to  increase  their  rates. 

There  were  a  few  complaints  about  the  quality  of  ser- 
vice rendered  by  the  municipal  plants,  and  there  would 
probably  have  been  more  had  they  not  been  publicly 

Table  58.   Voluntary  Reductions  in  Maximum  Net  Com- 
mercial Lighting  Rates  since  1910  (cents  per  K.W.H.) 


Company 

1910 

1911 

1912 

1913 

1914 

1915 

1916 

I.  Generating  — 

Amesbory 

•  •  •  • 

•  •  •  • 

•  •  •  • 

18  to  16 

•  •  •  • 

•  ■  •  • 

•  •  •• 

Attleborough. . 

•  •  •  • 

15  to  14 

14  to  13 

13  to  12 

12  to  11 

•  •  •  « 

•  •  •  • 

Bererly 

•  «  •  • 

•  •  •  • 

12  to  11 

•  •  •  ■ 

•  •  •  • 

11  to  10 

Buzzard's  Bay. 

•  •  •  • 

•  ■  •  • 

27  to  17.6 

•  «  •• 

•  •  •  • 

•  •  •  • 

Citizens' 

•  •  •  • 

•  •  *  • 

•  ■  •  • 

•  •  •  • 

•  •  •  • 

•  ••• 

Gloucester .... 

•  •  •  • 

*  •  •  • 

18  to  14 

14  to  10 

•  •  •« 

•  ••« 

Great  Barring- 

ton 

•  •  •  • 

•  •  •  • 

■  •  •  • 

•  •  •  • 

•  •  •  • 

•  •  •  • 

14.4  to  14 

Lee 

•  •  *  • 

.  •  .  . 

•  •  •  • 

•  •  •  • 

•  •  •• 

•  ■  •  ■ 

Leominster 

18  to  16 

16  to  15 

15  to  14 

14  to  12 

•  •  •  • 

•  •  •  • 

Newburyport.. 

•  •  •  • 

•  •  •  • 

•  •  ■  • 

14  to  IS 

•  •  •  • 

•  *  •  • 

North  Adams. . 

•  •  •  • 

•  •  •  • 

•  •  •  • 

•  •  »« 

12JStoll 

•  «  •  • 

Northampton. . 

•  •  •  • 

15  to  14 

«  •  •  • 

•  •  •  • 

•  ■  •  • 

•  •  •  • 

Plymouth. 

•  •  •  • 

•  •  •  • 

16.2  to  14.4 

•  •  •  • 

•  •  •  • 

14.4  to  13.6 

Qtrincy 

17  to  15 

•  •  ■  • 

15  to  13.5 

•  •  •  • 

•  •  •  » 

•  •  •  • 

Vineyard 

•  •  •  • 

•  •  •  • 

27  to  17.5 

•  •  •  • 

•  •  •  • 

•  *  •  • 

Weymouth.... 

•  •  •  • 

•  •  •  • 

.... 

•  •  •  • 

•  •  •  • 

•  •  •  ■ 

Winchendon. . . 

•  •  •• 

•  ■  •  • 

20  to  12 

•  •  •  • 

•  •  •  • 

•  •  •• 

n.  Purchasing  — 

Ayer 

•  •  •  • 

•  •  •  • 

•  «  •  • 

18  to  17 

•  •  •  • 

17  to  15 

•  •  •  • 

Blackstone  .... 

•  •  •  • 

•  •  •• 

•  a  •  • 

•  •  •  • 

15  to  14 

•  •  •  • 

14  to  13.5 

Franklin 

•  •  •  • 

•  •  •  • 

•  •  •• 

12  to  9.9 

•  •  •  • 

•  •  •  • 

•  •  •  • 

Harvard 

•  •  •  • 

•  •  •  • 

•  •  •  • 

•  •  •  • 

•  •  •  • 

•  •  •  • 

•  •  •  • 

Ludlow 

•  •  •  • 

•  •  •  • 

»  •  •  • 

•  •  •  • 

•  •  >  • 

•  •  •  * 

•  •  •  • 

Manchester. . . . 

•  •  •  • 

•  •  •  • 

•  •  •  • 

•  •  •  • 

•  •  •  • 

•  •  •  ■ 

•  •  •  • 

Milford 

•  •  •  • 

19tol8 

•  •  •  • 

•  •  •  • 

«  •  •  • 

•  •  •  • 

14  to  10 

Mill  River 

•  «  •  • 

•  •  •  ■ 

•  •  •  • 

•  •  ■  • 

•  •  ■  • 

•  •  •  • 

■  •  •  • 

North  Brook- 

field 

•  •  •  • 

•  •  •  • 

•  •  •  • 

•  •  •  • 

15.3  to  15 

•  •  •  • 

■  •  •  • 

Provincetown. . 

•  •  •  • 

•  •  •  • 

•  •  •  • 

•  •  •  • 

•  »  »  • 

•  «  •  • 

•  ■  •• 

Randolph. 

•  •  •• 

•  •  •  • 

•  •  •  • 

•  •  •  • 

•  •  •  • 

•  •  •  • 

•  •  •  • 

Shirley 

•  •  •  • 

•  •  •  • 

•  •  •  • 

■  •  •  • 

■  •  •  ■ 

■  •  ■  • 

•  •  •  • 

Spencer 

■  •  •  • 

•  •  •  • 

•  •  •  • 

•  •  •  ■ 

•  •  •  • 

•  •  •  • 

•  •  ■  • 

Sunderland.... 

•  •  •  • 

•  •  •  « 

•  •  ■  • 

20  to  13.5 

•  •  •  • 

•   ,  .• 

■  •  *• 

Ware 

•  •  •  • 

•  ■  •  • 

20toir>.3 

•  •  •  • 

15.3  to  15 

•  •  •  • 

•  •  •  • 

Williamstown.. 

•  •  •• 

•  •  •  • 

13.5  to  13 

•  •  •  • 

•  •  •  • 

13  to  12 

•  •  «  • 

owned,  for  people  usually  complain  less  about  inconven- 
iences of  their  own  making  than  about  those  which  are 
imposed  upon  them  by  others.  With  one  or  two  excep- 
tions there  seemed  to  be  httle  complaint  regarding  the 
service  furnished  by  the  companies,  and  in  many  cases 
it  was  spoken  of  in  the  most  appreciative  terms. 

Finally,  it  is  interesting  to  note  that  while  the  private 
plants  usually  watch  their  street  Kghts  carefully,  gener- 
ally keeping  a  man  on  inspection  duty  or  on  call  every 
night,  the  public  plants  seem  for  the  most  part  to  depend 
upon  citizens  or  policemen  to  report  outages,  etc.,  and 
then  attend  to  the  matter  when  circumstances  render  it 
convenient.  This,  again,  is  explained  by  the  fact  that  one 
who  serves  himself  is  naturally  less  particular  than  one 
who  hires  the  service  of  others. 

4.  Financial  Matters 

As  a  large  number  of  the  questions  on  the  schedule 
under  the  head  of  "Financial  and  Miscellaneous"  apply 
solely  to  municipal  plants,  these  will  be  first  discussed. 
It  was  found  to  be  necessary  to  ask  very  specifically  re- 
garding the  various  kinds  of  free  service  received,  because 
the  managers  of  municipal  plants  seemed  to  regard  as 
their  rightful  prerogatives  any  free  services  which  they 
had  customarily  received  from  the  municipality,  even 
though  the  electric  plant  rendered  no  service  in  return. 

Aside  from  street  lighting,  there  were  only  one  or  two 
instances  worth  noting  of  free  service  furnished  to  the 
municipality,  and  this  was  in  connection  with  the  fire 
alarm.  It  was,  however,  true  in  several  cases  that  the 
rates  charged  for  lighting  public  buildings  and  for  public 
power  are  somewhat  lower  than  in  fairness  to  the  other 
consumers  they  should  be.  But  the  writer  was  gratified 
to  find  that  in  at  least  seven  cases  the  public  plants  are 
now  charging  to  the  municipality  at  a  fixed  rate  per  lamp 
or  per  kilowatt  hoiu*  the  cost  of  street  lighting;  and  all  of 


H 


m 


316 


MUNICirAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


817 


the  managers  expressed  themselves  as  favoring  this  pol- 
icy. In  all  cases,  current  which  is  charged  against  the 
pubHc  authorities  is  regularly  billed  and  paid  for.  i 

In  two  or  three  cases  the  city  water  used  was  not  paid 
for  at  all,  and  in  a  few  others  it  was  secured  at  a  special 
low  rate.  Telephone  and  transportation  service  appeared 
to  be  always  properly  charged  up  to  the  department, 
though  the  matter  remains  doubtful  in  some  instances 
where  the  office  is  located  in  the  town  hall.  Only  one  plant 
pays  a  part  of  the  salary  of  the  town  or  city  treasurer, 
though  all  must  utilize  this  department  to  a  greater  or 
less  extent.  Two  plants  report  that  the  services  of  the 
sohcitor  are  paid  for  if  needed.  Most  managers,  however, 
affirm  that  if  they  must  have  legal  assistance  they  prefer 
to  put  their  case  in  the  hands  of  a  reed  lawyer  rather  than 
to  take  a  chance  on  the  city  solicitor,  who  is  often  a  man 
of  little  experience  or  ability. 

Half  of  the  plants  of  this  group  occupy  offices  in  the 
town  hall  for  which  they  pay  no  rent,  while  in  one  or  two 
other  cases  a  portion  of  the  operating  expenses  of  the  hall 
is  shared  by  the  electric  light  department.  Foiu*  or  five 
report  tiie  use  of  public  land  rent  free.  When  the  help  of 
employees  of  other  municipal  departments  is  used,  the 
usual  rates  of  wages  are  paid  according  to  the  statement 
of  the  managers.  In  two  or  three  cases  the  town,  under 
a  blanket  poHcy,  pays  the  premiums  on  all  or  practically 
all  of  the  insurance  carried  by  the  plant.  In  one  town 
the  salaries  of  the  municipal  Ught  board  ^  are  paid  by  the 
municipaUty,  and  in  the  thirteen  instances  in  which  the 
accounts  are  audited  by  the  public  auditor,  the  town  and 
not  the  lighting  department  bears  the  expense.  The  po- 
lice and  fire-alarm  service  is  in  practically  every  instance 
at  present  operated  as  a  separate  undertaking. 

The  total  amount  of  free  service  rendered  by  the  mu- 
nicipal plants,  if  street  lighting  be  excepted,  appeared  to 
*  Under  the  name  of  the  "Commissioners  of  Public  Works.'* 


amount  to  little  more  than  $500  annually,  and  probably 
an  equal  amount  is  given  in  various  ways  by  the  com- 
panies to  the  municipaUties  in  which  they  are  located. 
If  Holyoke  be  excluded,  the  free  service  received  would 
probably  amount  to  somewhat  more  than  $5,000  for  the 
seventeen  plants,  or,  including  the  cost  of  auditing,  which 
it  is  rather  difficult  to  estimate,  from  $7,000  to  $8,000.  In 
addition,  if  the  salary  of  the  town  and  city  treasurers  could 
be  fairly  apportioned  to  the  lighting  departments  accord- 
ing to  the  services  which  they  perform,  —  the  work  of 
well-paid  officers  in  all  private  plants,  —  we  would  have 
to  add  at  least  a  few  thousand  dollars  more  to  this  esti- 
mate.* (The  case  of  Holyoke  is  somewhat  different  from 
that  of  the  other  plants,  because  the  extensive  offices  used, 
covering  an  entire  floor  of  the  large  city  hall,  were  fitted 
up  at  the  expense  of  the  Ughting  department.  The  mana- 
ger accordingly  maintains  that  the  reasonable  allowance 
for  this  free  service  would  be  simply  the  interest  on  the 
investment  made  by  the  plant,  or  about  $1,000.  The 
writer  views  the  case  somewhat  differently,  however,  and 
feels  that  a  reasonable  allowance  should  also  be  made  for 
the  quarters  themselves,  even  though  they  were  unsatis- 
factory before  the  department  had  expended  money  on 
them.  In  view  of  all  the  circumstances,  $4,000  would  seem 
to  be  a  fair  estimate.) 

When  the  municipal  plant  is  operated  in  connection 
with  a  water-supply  system,  an  attempt  seems  to  be  made 
to  keep  the  operating  accounts  fairly  divided,  except  that 
the  water  used  is  rarely  paid  for.  So  far  as  the  capital  ac- 
count is  concerned,  the  theory  usually  held  is  that,  pro- 
vided the  building  was  already  erected  for  the  use  of  the 
water  department,  none  of  its  cost  should  be  charged  up 

*  This,  of  course,  does  not  include  the  taxes  foregone  by  the  commun- 
ity, and  no  allowance  is  made  for  the  assessment  of  a  portion  of  the  sal- 
ary and  expenses  of  the  Board  of  Gas  and  Electric  Light  Commissioners 
as  first  provided  for  in  sections  3  and  4  of  chapter  205  of  the  General  Acta 
(1917). 


f 


Il 


818 


MUNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


319 


to  the  lighting  department.  No  companies  were  being 
operated  under  these  conditions. 

In  only  two  or  three  cases  in  each  group  does  there 
appear  to  have  been  any  conspicuous  waste  or  extravagance 
in  operation.  Nor  do  the  instances  of  extravagance  or 
carelessness  in  investment  seem  to  have  been  more  numer- 
ous, though  it  must  be  admitted,  after  examination,  that 
at  least  two  municipahties  obviously  paid  too  much  for 
the  property  which  they  were  compeUed  by  law  to  take 
over  from  private  concerns.  On  the  other  hand,  nearly 
half  of  the  mimicipal  plants  were  candid  enough  to  admit 
that  their  financial  poHcy,  for  reasons  more  or  less  beyond 
their  control,  had  probably  been  too  conservative  for 
their  own  good  and  for  the  best  interests  of  the  pubhc. 
Most  of  the  companies  seemed  to  feel  that  they  had  been 
suflSciently  liberal  in  this  regard. 

The  private  plants  in  the  main  assert  that  their  con- 
struction accoimts  are  reasonably  correct,  though  the 
writer  is  pretty  certain  that  in  a  few  cases  they  are  sm^ly 
too  high.  Nearly  half  of  the  pubHc  plants,  however,  ad- 
mitted that  their  accounts  are  probably  too  low,  inas- 
much as  many  renewals  in  the  nature  of  improvements 
are  charged  up  to  operation,  when  logically  a  part  should 
be  charged  to  the  capital  account,  as  would  be  done  in  the 
case  of  most  companies.  Some  even  stated  that  they  fol- 
low the  practice  of  including  the  cost  of  the  smaller  ex- 
tensions in  the  maintenance  expenses,  in  order  to  keep 
the  apparent  investment  as  low  as  possible.  Further, 
many  of  the  expenses  of  labor  and  superintendence  during 
construction  and  extensions  have  at  one  time  and  an- 
other been  met  out  of  operation  cash.  Finally,  additions 
from  depreciation  fund  or  from  income  have  frequently 
not  been  properly  accounted  for. 

Upon  the  whole,  the  aim  of  the  managers  of  municipal 
plants  seems  to  be  to  keep  the  investment  account  as  low 
as  possible  because  of  the  psychological  effect  which  this 


apparent  economy  has  upon  the  citizens.  Many  a  one 
has  stated  to  the  writer  that  he  is  not  free  to  use  his  own 
judgment  in  the  matter,  as  the  public  will  not  stand  for 
it  —  a  fact  which  also  explains  the  failure,  in  many  in- 
stances, to  replace  antiquated  equipment,  or,  on  the  other 
hand,  the  purchase  of  second-rate  equipment.  In  accord- 
ance with  the  requirements  of  the  State  law,  the  ac- 
counts are  kept  in  such  a  way  that  the  most  intelligent 
taxpayer  scarcely  knows  whether  the  plant  is  making  or 
losing  money  in  operation  from  year  to  year.  Under  these 
circumstances,  it  is  comparatively  easy  for  a  manager  to 
secure  a  sufficiently  large  annual  appropriation  to  cover 
the  cost  of  "street  lighting,"  which  may  also  cover  an 
inexcusably  large  operating  deficit.  There  is  more  than 
one  road  to  Rome!  It  is  much  more  difficult,  however,  to 
persuade  the  people  in  a  town  meeting  that  it  is  necessary 
to  issue  more  bonds  or  notes,  for  that  is  something  tan- 
gible and  understandable,  and  such  funded  debt  saddles 
the  municipality  with  a  constant  and  definite  outlay  for 
interest  and  maturing  principal. 

In  the  matter  of  depreciation  all  of  the  municipal  plants 
but  two  go  through  the  formahty  of  having  a  real  fund  as 
the  law  requires,  usually  investing  it  annually  in  the  plant 
for  renewals  and  improvements  or  extensions.  The  com- 
panies, however,  are,  as  suggested  in  another  connection, 
very  irregular  in  this  regard,  most  admitting  that  depre- 
ciation to  the  extent  of  at  least  5  per  cent  annually  should 
be  carefully  taken  care  of,  but  maintaining  that  the  de- 
vice of  a  depreciation  fund  is  somewhat  of  an  anomaly. 
The  usual  policy  is  to  write  off  the  books  at  indefinite 
intervals  when  the  earnings  have  been  unusually  good, 
and  to  endeavor  to  keep  the  plant  in  first-class  operat- 
ing condition,  without  following  any  definite  theory.  In 
view  of  the  present  trend  of  regulation  of  pubUc  utility 
rates,  they  are,  from  a  private  point  of  view,  probably  jus- 
tified in  keeping  the  capital  account  as  large  as  possible. 


k 


820 


MUNICIPAL  ELECTRIC  LIGHTING 


A  publicly  owned  plant  occupies  a  somewhat  unique 
position  in  this  respect.  Naturally,  a  company  may  cease 
to  generate  current  and  even  let  its  equipment  run  down 
without  impairing  in  any  direct  way  the  interests  of  the 
stockholders,  even  though  the  tangible  assets  become  of 
small  value,  jyrovided  the  earnings  cordinue  to  he  at  the 
same  old  level;  for  the  market  value  of  the  stock  is  for  the 
most  part  merely  an  index  of  the  rate  of  dividends  paid.  A 
municipal  plant,  on  the  other  hand,  which  has  suffered  its 
equipment  to  deteriorate  or  has  abandoned  its  generating 
station,  may,  if  it  has  not  built  up  a  large  reserve,  —  in- 
vested in  the  plant,  if  you  will,  —  be  left  with  a  large  debt 
on  its  hands  which  will  be  a  burden  to  the  tasqjayers  or 
consumers  long  after  the  tangible  property  and  the  equity 
in  the  plant  are  destroyed.  To  be  sure,  the  rates  may  be 
made  high  enough  to  cover  all  of  the  fixed  charges  for 
principal  and  interest,  imtil  the  debt  is  wiped  out.  But  if 
this  is  done,  should  we  not  expect  the  municipal  plants 
in  the  futiu^  to  be  compelled  to  charge  considerably  higher 
rates  than  the  companies,  which  do  not  have  such  heavy 
fixed  charges  to  carry,  and  which  can,  without  impairing 
their  own  earnings,  give  the  public  the  benefit  of  the  de- 
creased costs  resulting  from  extensive  hydro-electric  gen- 
eration? The  3  per  cent  rate  of  depreciation,  legally  re- 
quired to  be  written  off  in  the  case  of  mimicipal  plants,  is 
ridiculously  small  in  view  of  the  rapid  depreciation  from 
obsolescence  which  has  characterized  and  still  marks  the 
electric  light  and  power  business.  Would  it  not  have  been 
wiser  for  public  plants  to  provide  for  this  inevitable  de- 
preciation by  charging  somewhat  higher  rates  in  the  past, 
rather  than,  by  postponing  it,  to  keep  up  the  rates  in  the 
years  to  come  when  the  charges  logically  should  be  lower? 
But  the  people  at  a  given  time  would  hardly  stand  for  such 
a  far-sighted  pohcy,  and  the  next  generation  cannot  well 
dictate  what  shall  be  its  inheritance. 

As  nearly  as  can  be  estimated,  the  investment  in  eqmp- 


IN  MASSACHUSETTS 


S21 


ment  which  is  no  longer  needed  by  the  seven  municipal 
plants  which  now  purchase  their  current  would  amount 
to  between  $400,000  and  $500,000.  The  plants  themselves 
do  not  place  the  figure  so  high,  because  they  consider  that, 
so  long  as  they  still  make  use  of  the  original  station  to 
receive  and  distribute  their  purchased  current,  only  the 
machinery  itself  should  be  regarded  as  "not  in  use."  They 
further  maintain  that  if  the  equipment  is  being  kept  in 
readiness  for  emergency  generation  it  is  still  "in  use." 
However,  having  made  ample  allowance  for  the  sort  of 
stations  and  equipment  that  would  be  needed  had  cur- 
rent never  been  generated,  and  having  deducted  the  prob- 
able scrap  value,  the  writer  feels  that  his  estimate,  based 
upon  the  depreciated  plant  accounts,  is  a  very  fair  one. 
Were  the  actual  construction  accounts  used  as  a  basis  of 
calculation,  the  amount  would  be  considerably  higher. 
A  similar  method  of  estimating  would  put  the  investment 
in  dead  assets  of  the  three  companies  at  between  $300,000 
and  $400,000. 

The  accounts  kept  by  the  public  plants  are  as  a  rule 
much  simpler  than  those  of  the  centrally  controlled  com- 
panies. All  of  the  accounts  appear  to  be  audited,  at  in- 
tervals varying  from  one  month  to  a  year.  The  former 
are  in  most  cases  audited  by  the  public  accountant, 
though  in  five  instances  outside  parties  are  called  in  to  do 
the  work.  Their  usual  audit  is  frequently  of  a  superficial, 
perfunctory  sort.  The  books  of  the  companies,  when 
under  group  control,  are  examined  by  representatives  of 
the  central  oflSce;  otherwise  certified  public  accountants 
usually  do  the  work. 

The  usual  precautions  against  financial  dishonesty  are 
the  audit  and  the  bonding  of  responsible  employees.  Five 
managers  of  public  generating  plants,  however,  and  six 
of  the  group  of  pm*chasing  plants  were  not  under  bond 
in  1915,  despite  the  requirements  of  the  law,*  and  in  many 

»  Mass.,  1914,  ch.  742.  sect.  113. 


iW 


II 


822 


MUNICIPAL  ELECTRIC  LIGHTING 


cases  the  amount  of  the  bond  is  low  in  comparison  with 
the  amomit  of  money  handled.  There  is  also  frequently 
an  additional  check  by  means  of  the  fact  that  at  one  time 
or  another  practically  all  money  passes  through  the  hands 
of  the  town  or  city  treasurer.  Though  in  cases  where  the 
manager  is  a  member  of  the  municipal  light  board  or  one 
of  the  selectmen,  as  occasionally  happens,  it  might  be 
comparatively  easy  to  introduce  dishonest  practices,  the 
writer  has  no  reason  for  thinking  that  there  have  been 
any  serious  misappropriations  of  funds  in  either  group  of 
plants.  In  fact  the  conduct  and  regulation  of  the  business 
is  for  the  most  part  such  that  this  would  scarcely  be  pos- 
sible on  any  large  scale.  Whatever  dishonesty  there  may 
be  usually  comes  about  in  another  way,  which  will  pres- 
ently be  mentioned. 

Summary 

Some  of  the  important  findings  thus  far  gained  by  means 
of  the  local  survey,  may  be  briefly  stated  as  follows: 

1.  The  municipal  plants  very  frequently  complained 
of  inadequate  boiler  capacity. 

2.  There  was  a  conspicuous  absence  of  the  various  eco- 
nomic appliances  in  both  groups,  but  this  lack  was  more 
pronounced  in  the  pubUc  plants. 

3.  The  generating  equipment  of  the  municipal  plants 
was  frequently  in  far  worse  condition  than  would  have 
been  expected;  in  numerous  instances  second-hand  appa- 
ratus had  been  originally  installed. 

4.  The  station  meters  appear  to  be  regularly  tested  by 
the  companies,  but  in  the  main  very  irregularly  tested 
by  the  other  group. 

5.  The  "housekeeping"  of  the  companies  was  usually 
better  than  that  of  the  municipal  plants. 

6.  The  stations  of  a  large  number  of  the  public  plants 
were  too  small,  badly  ventilated,  or  much  out  of  date. 
The  companies,  on  the  other  hand,  usually  presented  a 
satisfactory  condition  in  this  regard. 


IN  MASSACHUSETTS 


823 


7.  While  most  of  the  private  plants  had,  in  1915,  made 
adequate  preparation  for  the  present  and  the  near  future, 
most  of  the  municipal  plants  were  decidedly  unequal  to 
the  demands  which  might  reasonably  have  been  made 
upon  them. 

8.  The  investment  of  the  public  plants  would  have  been 
markedly  increased  had  not  a  large  number  (7  out  of  18) 
ceased  generating  current  between  1915  and  1917.  Many 
were  decidedly  "at  the  end  of  their  string"  in  a  physical 
way. 

9.  Many  of  the  remaining  municipal  plants  will  soon 
be  compelled  greatly  to  increase  their  station  investment 
imless  they  decide  to  purchase  their  current  for  the  future. 

10.  The  topographical  conditions  seem  to  be  decidedly 
favorable  to  the  public  plants. 

11.  The  companies  usually  appear  to  have  a  more  satis- 
factory line  construction,  and  they  have  a  more  accurate 
record  of  the  length  of  their  lines,  their  poles,  etc. 

12.  In  the  matter  of  making  extensions  for  new  busi- 
ness, the  private  plants,  being  more  subject  to  adverse 
public  opinion  and  legal  pressure,  seem  to  be  more  liberal 
than  the  other  group. 

13.  Much  more  attention  is  given  to  the  sale  of  appli- 
ances of  all  kinds  by  the  companies. 

14.  There  appears  to  be  more  careful  attention  paid 
to  the  street  lighting  service  by  the  companies,  and  usu- 
ally a  more  expeditious  method  of  handling  customers* 
complaints. 

15.  There  have  been  more  numerous  voluntary  reduc- 
tions in  rates  by  the  companies  than  by  the  municipal 
plants. 

16.  While  practically  no  free  service  is  now  rendered  by 
the  public  plants  to  their  communities,  a  good  deal  of 
unpaid  service  of  various  kinds  is  still  furnished  by  the 


y 


S24 


MUNICIPAL  ELECTRIC  LIGHTING 


k 


municipalities  to  their  plants,  the  actual  value  of  which 
it  is  very  diflBcult  to  estimate. 

17.  The  financial  policy  of  the  municipal  plants,  accord- 
ing to  their  own  admission,  has  in  numerous  cases  been 
too  conservative. 

18.  A  large  proportion  of  the  public  plants  admit  that 
their  construction  accounts  are  too  low,  as  they  pur- 
posely follow  the  policy  of  keeping  them  down,  because 
of  the  effect  which  this  apparent  economy  has  upon  the 
citizens.  Often  capital  charges  have  been  included  in  the 
operating  accounts,  which  otherwise  have  usually  tended 
to  be  relatively  low. 

19.  There  is  probably  an  investment  of  about  $500,000 
in  the  "dead  assets'*  of  municipal  plants  which  have 
ceased  to  generate  current.  This  fact  should  not  be  over- 
looked if  we  wish  to  know  the  real  financial  results  of 
public  ownership. 


CHAPTER  XII 

THE  LOCAL  BACKGROUND :    GENERATING  PLANTS 

(concluded) 

5,  The  Management 

From  the  very  nature  of  the  survey  the  questions  listed 
under  this  head  refer  only  incidentally  to  the  manage- 
ment of  private  plants.  Hence,  unless  specifically  indi- 
cated otherwise,  the  discussion  will  apply  to  the  public 
plants. 

There  are  no  municipal  light  boards  in  the  cities,  with 
the  exception  of  Chicopee,  which  has  secured  one  through 
special  legislation.  In  Hull  the  selectmen  serve  as  a 
board,  and  in  Hudson  the  commissioners  of  public  works. 
While  members  of  the  board  frequently  hold  other  public 
oflSces,  politics  do  not  seem  to  have  been  much  consid- 
ered in  their  election.  In  only  about  a  third  of  the  cases 
did  one  or  more  of  the  members  appear  to  have  what 
might  be  called  a  technical  knowledge  of  the  electric  light 
and  power  business.  The  remainder  are  for  the  most  part 
business  men.  In  some  instances  the  boards  take  a  very 
active  interest  in  the  department,  even  more  than  would 
seem  to  be  warranted;  but  for  the  most  part  the  manager 
is  left  in  practically  full  control.  The  law  is  not  altogether 
specific  as  to  how  the  division  of  responsibility  should  be 
made.^  In  three  cases  the  manager  is  also  a  member  of 
the  board  (1915). 

One  of  the  managers  (Holyoke)  is  under  the  civil  serv- 
ice, two  are  appointed  by  the  mayor,  and  the  remaining 
by  the  mimicipal  light  boards,  if  there  are  such.  The 
term  of  appointment  seems  actually  to  be  indefinite  in 

1  On  this  point  the  reader  is  referred  to  chapter  ii,  supra,  and  to  Mass., 
1914,  ch.  742,  sects.  112, 113. 


f 


326 


MUNICIPAL  ELECTRIC  LIGHTING 


about  half  the  cases;  in  six  or  seven  others  it  is  definitely 
only  one  year;  while  in  two  of  the  cities  the  manager  holds 
for  three  years.  With  few  exceptions  it  seems  to  be  the 
policy  to  retain  the  manager  for  a  considerable  length  of 
time.  The  period  of  service  for  the  present  managers 
varies  from  one  to  nearly  twenty  years;  while  the  aver- 
age length  of  service  of  all  is  from  eight  to  ten  years.  The 
basis  of  selection  apjjears  in  most  cases  to  be  general  fit- 
ness for  the  work,  rather  than  any  political  considerations. 
In  some  cases,  however,  particularly  in  the  past,  poUtics 
have  played  a  part,  leading  to  the  appointment  of  wholly 
incompetent  men,  and  in  one  or  two  instances  religious 
considerations  were  apparently  involved. 

It  is  interesting  to  note  the  technical  qualifications  of 
these  managers.  Two  in  the  smaller  plants  appear  to  have 
no  training  of  any  sort  which  would  fit  them  for  the  work, 
and  some  years  ago  such  cases  were  by  no  means  uncom- 
mon. Four  have  secured  all  of  their  training  in  the  plant 
itself,  having  worked  up  from  the  lowest  positions.  The 
remaining  two  thirds  began  their  career  in  the  service  of 
private  concerns,  usually  in  electric  light  and  power  plants 
in  the  State;  but  one  had  been  with  the  Commonwealth 
Edison  Company  of  Chicago,  and  two  or  three  with  the 
General  Electric  Company. 

The  writer  was  highly  gratified  to  find,  in  addition, 
that  five  ^  managers  of  mimicipal  plants  are  graduates  of 
the  Massachusetts  Institute  of  Technology,  one  of  the 
Engineering  Department  of  Tufts  College,  while  a  sev- 
enth had  completed  most  of  the  work  for  a  degree  in 
engineering  at  McGill  University.  Still  another  has  had 
about  two  years  of  college  work  along  other  lines.  Most 
of  the  remaining  have  had  high-school  educations,  and  a 
few  have  endeavored  in  addition  to  improve  themselves 
along  technical  lines  by  means  of  correspondence  courses. 
In  the  group  of  companies,  on  the  other  hand,  only  two 

^  Including  one  manager  of  a  plant  which  purchases  current. 


IN  MASSACHUSETTS 


327 


or  three  local  managers  or  superintendents  were  found 
who  are  technical  graduates,  though  aU  have  evidently 
had  a  reasonably  satisfactory  general  education  and  are 
first-class  practical  men,  having  spent  most  of  their  lives 
in  the  business.  These  facts  would  seem  to  indicate  that 
the  position  of  manager  of  municipal  electric  fighting  is 
not  unattractive  to  men  of  some  education,  and  that, 
contrary  to  the  common  assertion,  the  larger  mumcipaJ 
plants  probably  now  have  fully  as  intelligent  management 
as  have  the  private  plants,  except  in  so  far  as  the  latter 
may  gain  by  central  control. 

Only  six  out  of  eighteen  municipal  managers  are  mena- 
bers  of  one  or  more  technical  societies,  such  as  the  Ameri- 
can Institute  of  Electrical  Engineers,  while  eight  out  of  t«n 
managers  or  superintendents  of  companies  have  such  affiha- 
tions.  The  reasons  for  the  poor  showing  made  by  the  for- 
mer in  this  regard  are  numerous.  In  the  first  place,  they 
are  not  allowed  by  the  by-laws  of  the  organization  to  be- 
come  members  of  the  National  Electric  Light  Associa- 
tion, though  the  New  England  Section  is  well  disposed 
toward  them  and  invites  them  regularly  to  its  meetings 
^a  courtesy  of  which  a  few  avail  themselves.    Again, 
many  feel  that  their  salaries  are  not  sufficient  to  justify 
their  incurring  the  expense  of  dues  and  annual  meetings 
of  such  societies,  for  while  companies  commonly  them- 
selves bear  this  charge,  municipalities  follow  no  such 
practice.   In  the  third  place,  most  of  them  feel  that  there 
is  a  decided  antagonism  on  the  part  of  the  citizens  against 
any  affiliations  with  interests  which  are  naturally  op- 
posed to  the  principle  of  pubHc  ownership.   Many,  also, 
find  that  the  public  do  not  look  with  approval  upon  their 
being  absent  for  a  short  time  in  order  to  attend  such  meet- 
ings—the feeling   being  that    they   are   merely   away 
"having  a  good  time"  instead  of  attending  to  business. 
And,  finally,  some  of  the  managers,  very  conscientious 
in  the  performance  of  theb  duties  and  feeling  their  re- 


S28 


MUNICIPAL  ELECTRIC  LIGHTING 


sponsibilities  keenly,  do  not  consider  that  they  should 
spare  the  time  or  run  the  risk  of  having  some  accident 
happen  during  their  absence.  Hence,  it  is  not  surprising 
that  so  few  belong  to  scientific  societies.  There  is,  how- 
ever, a  State  Association  of  Managers  of  Municipal  Light- 
ing, which  has  one  or  two  informal  outings  each  year  at 
which  views  can  be  interchanged,  and  where,  the  writer 
is  pleased  to  state,  much  real  good  cheer  is  in  evidence. 

As  to  the  political  activities  of  the  managers  of  public 
plants  the  writer  is  not  in  a  position  to  speak  with  abso- 
lute proof  as  to  the  conditions  in  the  past.  It  appears, 
however,  that  there  is  less  undesirable  manifestation  of 
this  sort  now  than  formerly,  though  in  two  cases  recently 
the  manager  has  beyond  a  doubt  dabbled  in  the  game, 
and  in  three  or  four  others  there  is  ground  for  suspicion. 
More  than  half  of  them  state  definitely  that  they  have 
not  been  interfered  with  for  political  reasons.  Three  admit 
that  politics  at  present  make  the  work  very  unpleasant; 
while  three  others  affirm  that  they  were  formerly  thus 
troubled.  The  nature  of  this  interference  would  be  rather 
hard  to  define.  In  some  cases  it  takes  the  form  of  an  at- 
tempt at  favoritism,  and  in  others  it  is  marked  by  an  effort, 
for  ulterior  motives,  to  limit  the  manager  in  the  use  of 
his  judgment  as  to  the  proper  operating  or  financial 
policy.  Frequently,  also,  he  is  hampered  more  by  the 
ignorance  of  the  citizens  regarding  technical  matters, 
than  by  any  sinister  political  manipulation.  Managers  of 
private  plants  have  their  difficulties  as  well,  though  usu- 
ally of  a  different  sort.  The  chief  weapons  to  be  used 
against  a  company  are  complaints  about  price  or  quahty 
of  service. 

Three  or  four  cases  were  found  in  which  the  municii)al 
manager  does  not  give  all  of  his  time  to  the  work,  and  in 
a  number  of  cases  he  also  performs  the  duty  of  inspector 
of  wires,  thus  somewhat  increasing  his  salary.  It  seems 
rather  anomalous,  however,  for  him  to  hold  this  posi- 


IN  MASSACHUSETTS 


329 


tion.  In  several  cases  he  also  has  charge  of  the  water  sys- 
tem, for  which  he  receives  additional  compensation. 

The  salary  of  two  or  three  of  the  municipal  managers 
is  ridiculously  low,  while  in  one  or  two  other  cases  it  ap- 
pears to  be  disproportionately  high.*  Upon  the  whole, 
however,  the  writer  does  not  feel  that  at  present,  a  num- 
ber of  increases  having  been  made  since  1915,  the  salaries 
are  unreasonably  low,  considering  the  qualifications  and 
abilities  of  the  men  and  the  work  which  they  are  expected 
to  do.  No  attempt  was  made  to  secure  definite  figures 
regarding  the  salaries  paid  by  all  of  the  companies,  though 
they  seem  to  run  slightly  higher  than  in  the  municipal 
plants.  But  it  must  be  remembered  in  this  connection 
that  the  local  manager  of  a  company,  particularly  of  one 
which  is  centrally  controlled,  is  relieved  of  many  of  the 
annoying  responsibiUties  which  are  imposed  upon  a  mana- 
ger of  municipal  lighting,  nor  does  he  need  to  be  so  sensi- 
tive to  the  popular  will. 

Ten  managers  state  that  they  are  given  practically  full 
authority  (as  previously  indicated),  while  the  others  to 
a  greater  or  less  degree  are  controlled  by  the  mayor  or 
by  the  municipal  light  board.  With  a  few  exceptions  an 
honest  attempt  seems  to  have  been  made  to  use  wisely 
the  authority  granted.  Materials  are  for  the  most  part 
purchased  dh^ctly  by  the  manager,  though  it  is  not  un- 
common for  the  board's  approval  to  be  required  for  ex- 
penditures above  a  certain  amount  —  usually  five  hundred 
dollars.  For  the  large  purchases  the  practice  of  securing 
competitive  bids  is  usually  followed.  Local  dealers  do 
not  seem  to  be  favored  orcfinarily  unless  the  difference  in 
price  is  slight  or  the  deliveries  much  more  prompt.  In 
most  cases,  however,  the  question  does  not  arise.  Many 
managers  complain  that  they  are  prevented  from  secur- 

»  Of.  Mass.,  1914,  ch.  742,  sect.  113.  The  amount  of  compensation, 
as  well  as  the  term  of  oflSce,  is  to  be  fixed  by  the  city  council  or  by  the 
selectmen  or  municipal  light  board  or  similar  body. 


»< 


III 


m 


m 


S30 


MUNICIPAL  ELECTRIC  LIGHTING 


ing  material  when  it  might  be  bought  to  best  advantage, 
because  of  the  fact  that  the  appropriations  do  not  come 
at  the  right  time  and  there  is  no  surplus  fund  to  draw  upon. 
For  the  companies  which  are  centrally  controlled,  as 
well  as  for  some  of  the  remaining,  material  is  bought  by 
a  purchasing  agent,  who  is  usually  given  wide  discretion. 
They  also  customarily  place  their  contracts  through  com- 
petitive bidding.  Some  years  ago,  however,  it  was  com- 
mon for  a  number  of  companies  on  the  Ust  to  purchase 
material  from  a  supply  company,  which  was  owned  by 
those  having  the  chief  mterest  in  the  lighting  plant.  This 
practice  seems  now  to  have  been  effectively  frowned  down 
by  the  Board  of  Gas  and  Electric  Light  Commissioners. 

To  some  it  may  seem  extremely  futile  for  one  in  the 
position  of  the  writer  to  ask  a  manager  whether  any  one 
has  ever  tried  to  corrupt  him,  or  in  lieu  of  that  to  en- 
deavor to  discover  the  fault  from  other  dependable  sources. 
There  are,  however,  more  ways  than  one  of  finding  out 
pretty  accurately  whether  one  holding  a  responsible  posi- 
tion is  gifted  with  an  itching  pahn,  though  it  is  practi- 
cally impossible  to  prove  a  case  of  this  sort. 

At  any  rate,  about  half  of  the  mimicipal  managers 
either  admitted  that  some  time  during  their  tenure  they 
had  been  offered  graft  of  one  sort  or  another,  or  they  sug- 
gested that  they  knew  of  managers  who  had  been  dis- 
honest. Naturally  no  one  could  be  expected  to  incrimi- 
nate himself  and  the  practice  is  surely  not  so  common  as 
it  used  to  be.  Yet  one  man  stated  that  he  received  the 
"usual  discounts"  when  purchasing  certain  material. 
Another  volunteered  that,  in  making  a  sale  of  a  lot  of  wire 
which  had  been  scrapped,  he  had  been  offered  one  thousand 
dollars  if  he  would  permit  the  pin-chaser  to  do  the  weigh- 
ing. Others  have  spoken  of  the  offer  of  certain  percentages 
on  the  cost  of  installation  of  some  particular  type  of 
machinery  —  though  it  is  practically  certain  that  none  of 
the  standard  concerns  would  use  such  tactics. 


IN  MASSACHUSETTS 


SSI 


The  commonest  method  of  approach,  however,  is  the 
offer  of  a  "rake-off"  on  coal  purchased,  which  usually 
amounts  to  biUing  a  certain  grade  and  substituting  an 
inferior  grade.    Several  managers  stated  that  they  had 
been  offered  such  inducements,  and  that  they  well  knew 
cases  in  which  the  graft  had  been  axjcepted.    The  most 
patent  case  of  dishonesty  brought  to  the  writer  s  atten- 
tion was  that  practiced  by  a  manager  who  was  also  mter- 
ested  in  a  coal  yard.  He  is  said  to  have  been  able  to  re- 
tire  with  a  considerable  fortune  after  a  few  years.  In  one 
case,  also,  and  that  a  very  important  one,  as  nearly  as  can 
be  ascertained  without  having  been  a  party  to  the  trans- 
action, it  has  been  customary  for  the  manager  to  pay 
roundly  in  order  to  secure  his  position,  which  carries  an 
absurdly  low  salary,  and  then  to  piece  out  his  stipend  and 
earn  back  his  purchase  money  by  the  usual  graft.   It  is 
said  that  an  honest  dealer  had  no  opportunity  to  seU  his 
goods  to  this  plant,  and  the  present  unsatisfactory  con- 
dition of  comparatively  new  equipment,  as  weU  as  the 
formerly  excessively  high  operating  expenses,  appear  to 
bear  witness  to  the  truth  of  the  charges  which  have  been 
made  by  numerous  creditable  persons  who  were  in  a  posi- 
tion to  know.   The  condition  of  affairs  in  this  particular 
place  was  and  is  practically  an  open   secret.    Here  the 
lighting  plant  has  ahnost  always  been  regarded  as  the 
football  of  the  municipal  government.  Conditions  are  still 
unspeakably  rotten,  though  Uttie  if  any  of  the  blame  at 
present  rests  upon  the  manager. 

So  far  as  concerns  the  municipal  light  boards  or  other 
municipal  authorities  which  ultimately  control  the  Ught- 
ing  situation,  the  writer  knows  that  in  several  cases  their 
integrity  has  been  by  no  means  unimpeachable.  In  one 
instance  a  board  is  said  on  good  authority  to  have  re- 
fused to  install  a  certain  excellent  piece  of  equipment  be- 
cause the  dealer  would  not  give  the  bribe  which  they 
rather  naively  asserted  they  were  in  the  habit  of  receiving. 


im 


332 


IVIUNICIPAL  ELECTRIC  LIGHTING 


m 


In  another  case  some  members  of  a  board,  who  were  secur- 
ing bids  for  an  important  piece  of  extension,  won  heavily 
at  poker  one  night  from  one  of  the  agents  who  was  eager 
to  put  through  a  deal  for  his  house.  As  might  be  sup- 
posed, that  sealed  the  contract;  but  as  a  sequel  it  should 
be  stated  that  the  work  when  completed  was  far  from 
satisfactory  to  the  pubUc. 

Other  cases  of  crookedness  might  be  mentioned.  Yet 
it  is  needless  to  multiply  these  examples,  for  probably 
most  of  them  could  be  duplicated  under  private  manage- 
ment if  the  proj)er  channels  of  information  were  sounded. 
As  a  general  proposition,  however,  it  would  seem  that, 
excepting  Holyoke  and  one  or  two  other  cases,  the  larger 
the  municipahty  which  has  a  plant  of  its  own,  the  greater 
are  the  opportunities  for  dishonesty  and  the  more  fre- 
quently is  it  practiced.  The  Unoriy  with  its  old-fashioned 
methods  and  meetings,  is  evidently  much  freer  from  graft 
than  the  city. 

Something  more  should  be  said,  in  conclusion,  regard- 
ing the  municipml  managers.  The  writer  was,  in  most 
cases,  struck  by  the  earnestness  and  conscientiousness 
with  which  they  now  perform  their  duties,  some  never 
giving  themselves  even  a  brief  vacation.  In  most  cases 
they  seem  to  feel  a  sort  of  proprietorship  in  their  plants, 
and  they  accordingly  exert  themselves  to  the  utmost  to 
make  as  good  a  showing  as  possible.  To  do  this  they  must 
familiarize  themselves  with  all  aspects  of  the  work,  and 
must  themselves  often  perform  service  which  under  pri- 
vate ownership  would  ordinarily  be  done  by  specialists. 

With  few  exceptions,  however,  they  feel  that  their  posi- 
tion is  an  almost  intolerably  difficult  one.  On  the  one 
hand  they  have  the  pubUc  to  satisfy  —  a  pubUc  which 
beheves  that  the  manager  is  its  propertyy  which  demands 
twenty-four  hours  of  cheerful  service  each  day,  which  all 
too  readily  criticizes  the  management  if  things  go  wrong 
and  complacently  accepts  the  credit  for  any  success  that 


IN  MASSACHUSETTS 


333 


may  be  attained.  On  the  other  hand  they  have  their 
ideals  of  the  correct  policy  which  should  be  followed  for 
the  present  as  well  as  for  the  future.  In  too  many  in- 
stances they  are  absolutely  prevented  from  doing  what 
they  know  should  be  done,  either  by  the  lighting  board 
or  the  municipal  government  or  by  the  adverse  vote  of  a 
town  meeting.  They  suffer  most  because  of  the  ignorance 
of  those  who  strive  to  direct  their  policy,  i.e.,  the  people, 
whose  knowledge  of  the  business,  even  among  the  more 
intelligent,  rarely  goes  so  far  as  the  ability  to  read  their 
own  meters  and  to  remember  the  price  which  they  pay 
per  kilowatt  hour.  They  frequently  grow  discouraged 
and  say,  "What's  the  use?"  —  but  still,  with  almost  no 
exceptions,  they  keep  everlastingly  at  it,  making  the  best 
of  bad  circumstances  and  hoping  for  a  better  future. 

By  these  words  of  appreciation  the  writer  means  to 
make  no  invidious  comparisons  with  the  managers  of  pri- 
vate plants.  But  he  does  wish  to  assert,  and  assert  strongly, 
that,  in  spite  of  the  mistakes  of  the  past,  the  municipal 
managers  as  a  class  are  at  present  striving  for  the  same 
ends  that  are  sought  for  in  private  business,  and  that  if 
these  ends  are  not  attained,  it  is,  with  few  exceptions,  be- 
cause of  the  inhibitions  almost  unavoidably  set  up  by 
municipal  ownership,  rather  than  because  they  them- 
selves are  incompetent  to  perform  the  tasks  which  they 
have  undertaken. 

If  this  be  the  case,  the  reader  may  well  ask  why  the 
managers  remain  in  such  an  unsatisfactory  position.  Why 
do  they  not  seek  employment  elsewhere?  To  this  question 
the  writer  would  reply  that,  in  the  first  place,  there  is  a 
certain  satisfaction  in  wielding  such  outwardly  full  author- 
ity as  is  usually  granted  to  the  manager,  and  there  is  also 
a  certain  degree  of  prestige  connected  with  the  position. 
These  facts  have  induced  a  number  of  reasonably  good 
men  to  enter  the  mimicipal  service  because  they  grew 
tu-ed  of  holding  a  more  subordinate  position  under  pn- 


S34 


MUNICIPAL  ELECTRIC  LIGHTING 


vate  employ.  Then,  once  having  gotten  into  public  serv- 
ice of  this  kind,  it  seems  to  be  very  difficult  to  go  back 
into  a  private  position.  The  managers  themselves  have 
constantly  stated  that  a  prejudice  exists  against  them, 
and  the  writer  has  ascertained  the  truth  of  this  claim  by 
discussing  the  matter  with  many  responsible  men  who  are 
engaged  in  private  business.  They  maintain  that  one  who 
has  grown  accustomed  to  the  public  way  of  doing  things, 
is  as  a  result  largely  unfitted  for  usefulness  in  corporation 
work,  in  which  the  methods  and  the  point  of  view  have 
ordinarily  been  so  very  different. 

Perhaps  this  prejudice  is  ungrounded,  though  the 
writer  knows  of  only  one  or  two  cases  in  the  State  in  which 
a  man  has  stepped  from  the  managership  of  a  municipal 
plant  to  the  employ  of  an  electric  company.  Yet  many 
managers  with  whom  the  matter  has  been  discussed  in 
confidence,  have  said  that  they  are  merely  waiting  to  find 
a  favorable  opening  in  some  private  enterprise,  and  prac- 
tically all  say  without  hesitation  that  they  would  prefer 
to  work  for  private  interests.  Their  general  feeling  may 
be  aptly  smnmed  up  by  saying,  "It  is  hard  to  serve  many 
masters." 

6.  The  Emplotees 

As  was  suggested  in  an  earlier  chapter,  there  is  no  uni- 
formity followed  in  the  method  of  returning  the  average 
number  of  laborers  employed.  Some  give  only  the  number 
regularly  employed,  while  others  Hst  all  who  are  employed, 
even  though  for  only  a  portion  of  the  year.  In  practically 
all  instances  the  manager  is  supposed  to  hire  the  employ- 
ees, though  in  one  or  two  cases  in  each  group  the  matter 
is  left  to  the  superintendents  or  foremen,  who  are  sub- 
ordinate to  the  manager.  In  the  four  cities  having  public 
plants,  all  except  the  laborers  are  under  the  civil  service.* 

There  seems  to  be  no  particular  discrimination  against 

*  Cf.  Mass.  R.L.,  cb.  19,  sect.  36,  and  Mass.,  1902,  ch.  544,  sect.  13. 


IN  MASSACHUSETTS 


335 


foreigners,  though  practically  all  of  the  companies  em- 
ploy them  and  scarcely  half  of  the  municipal  plants  do  so.* 
In  about  two  thirds  of  the  municipalities  in  this  group  it 
does  not  appear,  recently  at  any  rate,  that  political  con- 
siderations have  influenced  the  appointment  of  employees. 
In  four  or  five  cases  it  is  certain,  however,  that  politics 
have  played  a  more  or  less  important  part,  while  in  one 
or  two  cases  religious  considerations  have  had  some  in- 
fluence. In  an  equal  number  of  instances,  naturally,  the 
employees  have  dabbled  somewhat  too  freely  in  politics. 
Here,  again,  the  larger  plants  have  been  troubled  most. 

Six  employees  of  municipal  plants  were  found,  in  addi- 
tion to  the  managers,  who  have  had  what  might  be  called 
a  technical  training,  more  or  less  complete.  These,  how- 
ever, were  confined  to  only  two  of  the  larger  plants.  About 
the  same  number  of  technically  trained  men  were  found 
in  the  private  plants  visited.  Seven  of  the  former  group 
of  employees,  representing  three  different  plants,  are 
members  of  some  State  or  National  technical  organization, 
while  from  twenty  to  twenty-five  were  found  in  the  ten 
companies  visited. 

The  eight-hour  day  is  supposed  to  be  in  force  in  all  of 
this  group  of  public  plants.  In  the  companies,  also,  the 
majority  are  on  the  eight-hour  shift,  though  two  still 
have  the  nine-hour  day,  one,  the  ten-hour,  and  in  two 
cases  there  is  a  twelve-hour  shift  for  certain  employees. 
There  seems  to  be  no  noticeable  difference  in  the  rate  of 
wages  paid  by  the  two  groups.  A  few  of  the  companies 
pay  lower  than  the  usual  rate,  and  a  few  pay  higher,  while 
the  municipal  plants  seem  to  adhere  closely  to  the  stand- 
ard schedifle.  It  must  also  be  remembered  that  the  pri- 
vate station  employees  have  a  far  pleasanter  place  in 
which  to  work  than  have  the  corresponding  public  em- 

*  This  is  as  would  be  expected  as  a  result  of  the  laws  requiring  prefer- 
ence to  be  given  to  citizens  of  the  Commonwealth.  Cf.  Mass.,  1914,  ch. 
600,  sect.  1. 


^^ 


336 


MUNICIPAL  ELECTRIC  LIGHTING 


ployees.  It  is  scarcely  worth  while  to  discuss  the  average 
rate  of  wages  paid,  beyond  what  has  already  been  said 
in  a  preceding  chapter,  for  during  these  abnormal  timis 
wages  are  being  rapidly  though  irregularly  increased  by 
both  groups.  The  usual  rate  paid  for  overtime  work  is 
time  and  a  half,  though  in  both  cases  there  are  plants 
which  make  no  extra  allowance,  and  one  or  two  seem  to 
pay  nothing  at  all.^ 

According  to  the  statements  of  the  managers  of  munic- 
ipal Hghting,  the  services  of  employees  of  other  mimicipal 
departments,  such  as  the  highway  or  water  department, 
are  utilized  in  only  four  or  five  cases,  and  then  rarely. 
It  is  customary  to  pay  for  such  labor  at  the  usual  rate. 

For  the  most  part  the  employees  appear  to  be  retained 
in  both  groups  as  long  as  they  care  to  stay,  provided,  of 
course,  that  they  do  satisfactory  work.  As  might  be  sup- 
posed, however,  the  firemen  and  common  laborers  are 
usually  a  rapidly  changing  lot.  The  power  of  discharge 
rests  in  practically  all  cases  with  the  manager,  though  in 
two  instances  in  municipal  plants  the  authority  is  lodged 
in  the  hands  of  the  superintendents  or  foremen.  There  is 
frequently  an  appeal  from  the  decision  of  the  manager  to 
the  municipal  light  board  or  the  municipal  government. 
There  seems  to  be  no  appeal  from  the  decision  of  a  com- 
pany's manager  or  superintendent.  The  ground  for  dis- 
charge commonly  given  is  incompetency.  In  scattering 
instances,  however,  other  reasons  were  stated  as  follows: 
"NegUgence,"  "drunkenness,"  "sleeping  on  watch,"  "in- 
subordination," "agitation  for  higher  wages"  {sic),  and 

politics." 


<i 


*  The  writer  is  not  certain  that  the  plants  in  municipalities  which 
have  adopted  the  eight-hour  day  always  adhere  to  the  law.  He  knows 
of  one  instance  in  which  the  chief  engineer,  who  has  been  with  the  plant 
almost  from  its  beginning,  has  worked  a  total  of  two  years'  overtime 
within  the  last  five  years,  but  has  never  received  one  cent  therefor.  The 
law,  with  its  penalties,  may  also  be  a  dead  letter  m  other  cases.  Cf .  Mass., 
1911,  ch.  494,  sects.  1  and  3. 


IN  MASSACHUSETTS 


337 


In  the  majority  of  cases  in  both  groups  a  two  weeks' 
annual  vacation  is  allowed  with  pay,  as  well  as  the  cus- 
tomary holidays.  Saturday  half-hoUdays  are  more  com- 
mon among  the  public  plants;  but,  on  the  other  hand, 
two  or  three  of  these  allow  no  regular  vacations  of  any 
kind.  Upon  the  whole,  there  seems  to  be  little  to  choose 
between  the  two  groups  in  this  regard. 

In  the  matter  of  sick  leave  with  pay  aU  of  the  com- 
panies appear  to  foUow  a  liberal  poUcy,  laying  down  no 
specific  rules,  but  providing  particularly  for  their  old  em- 
ployees,  at  the  discretion  of  the  manager  or  of  the  direc- 
tors. Several  cases  were  brought  to  the  writer's  attention 
in  which  faithful  employees,  unable  to  do  their  custom- 
ary work,  were  kept  on  the  pay-roll  for  a  year  or  even 
longer.  The  fact  that  the  returns  made  to  the  State  Board 
do  not  disclose  individual  wages  makes  it  possible  to  fol- 
low this  practice  without  incurring  the  criticism  which 
might  otherwise  arise,  for  there  are  always  people  who 
are  suspicious  and  who  would  fear  that  wages  paid  to  an 
employee,  supposedly  unable  to  work,  might  be  a  mere 
padding  of  the  pay-roll  for  private  purposes. 

The  municipal  plants,  on  the  contrary,  are  much  less 
human  in  this  regard.  Three  or  four  state  definitely  that 
they  allow  no  sick  leave  with  pay,  five  give  two  weeks, 
one  a  month,  while  the  remainder  foUow  no  fixed  poHcy, 
but  leave  the  matter  largely  to  the  discretion  of  the  mana- 
ger, who  is  constantly  under  pressure  to  effect  economies.^ 
Without  discussing  at  length  the  outcome  of  this  poUcy, 
the  foUowing  reasons,  suggested  by  the  managers  them- 

1  The  writer  knows  personally  of  one  of  these  cases,  "left  to  the  dis- 
cretion of  the  manager."  in  which  an  unusually  faithful  employee,  who 
had  served  for  about  twenty-five  years,  having  contracted  a  serious  lU- 
ness.  which  compelled  hhn  to  lose  three  months'  time,  reived  not  a 
cent  of  pay  for  Uie  period  of  his  sickness.  This,  to  be  sure.  ;«J°^^;^« 
case;  but  for  personal  or  political  reasons,  it  is  possible  for  the  matter  of 
sick  leave  to  be  handled  in  a  most  arbitrary  fashion  by  the  manager  of 
a  municipal  plant,  or  by  the  manager  of  a  private  plant  as  well. 


I  i  . 


338 


MUNICIPAL  ELECTRIC  LIGHTING 


selves,  may  be  cited  as  explaining  in  large  measure  the 
illiberal  attitude  of  public  plants. 

In  the  first  place,  the  manager,  who  is  constantly  under 
the  public  eye,  is  made  to  feel  that  his  tenure  of  oflBce  de- 
pends largely  upon  his  making  a  good  financial  showing. 
He  must  by  every  means  keep  down  expenses.  Again, 
every  one  knows  when  a  pubHc  employee  is  not  working, 
and  if  the  pay  still  goes  on,  that  also  is  known.  Hence, 
every  opportunity  arises  for  suspicion  and  false  accusa- 
tion. Finally,  a  conscientious  manager,  in  order  to  avoid 
any  appearance  of  favoritism,  frequently  carries  himself 
so  straight  that  he  leans  over  backward.  He  may  even 
work  great  injustice  in  an  attempt  to  appear  absolutely 
just.  A  company  can  do  largely  as  it  pleases  in  questions 
such  as  this,  while  in  a  municipal  plant  everybody's  fin- 
ger, directly  or  indirectly,  sticks  itself  into  the  pie. 

Half  of  the  companies  give  some  sort  of  present  to  their 
men  at  Christmas  or  Thanksgiving  time,  while  this  practice 
does  not  appear  to  exist  in  the  public  plants.  With  two 
or  three  exceptions,  no  well-defined  attempt  at  welfare 
work  was  found  in  either  group  —  in  fact,  one  would  hardly 
expect  this  in  establishments  which  employ  so  few  men. 

From  the  nature  of  the  work  unionization  is  not  com- 
mon among  the  employees  of  the  small  electric  plants. 
Yet  in  several  instances  in  both  groups  it  was  found  that 
the  firemen's,  engineers',  or  linemen's  unions  are  in  evi- 
dence. Though  there  does  not  appear  to  be  any  general 
opposition  to  union  labor  on  the  part  of  the  management 
in  either  case,  yet  the  employees  are  somewhat  more 
highly  organized  in  the  municipal  plants  than  in  the  com- 
panies. It  hardly  seemed  worth  while,  for  the  purposes 
of  this  study,  to  endeavor  to  secure  the  exact  niunber  of 
union  members. 

In  five  or  six  municipal  plants  there  have  been  recently 
some  slight  labor  troubles,  occasioned  in  the  main  by  an 
agitation  for  higher  wages.  The  management  of  the  com- 


IN  MASSACHUSETTS 


339 


panics  did  not  admit  that  they  had  experienced  any  diffi- 
culty on  this  score.  But  several  in  each  group  stated  that 
their  employees  were  not  altogether  satisfied  with  their 
wages  or  the  conditions  of  employment. 

7.  General  Considerations 

It  was  rather  interesting  at  this  date  to  make  an  at- 
tempt to  discover  why  these  municipalities  of  Massachu- 
setts had  originally  entered  upon  the  business  of  electric 
lighting.  The  general  answer  seems  to  be  that  they  simply 
had  a  desire  for  municipal  ownership,  hoping  to  secure 
financial  gains  or  better  service  therefrom.  Of  other  spe- 
cific answers  given  to  this  question  the  following  may  be 
suggested,  together  with  the  number  of  plants  to  which 
they  in  each  case  apply:  "Unsatisfactory  service  of  local 
company,"  four;  "Private  plant  stopped  generating," 
one;  "The  people  needed  electric  service  and  there  was 
no  other  way  to  obtain  it,"  four;  "Private  lighting  serv- 
ice had  purposely  been  kept  out  of  the  territory,"  two; 
"Politics,"  one;  influenced  by  the  "General  movement 
for  municipal  ownership,"  three. 

In  the  case  of  the  public  plants  the  attitude  of  the 
municipal  government  seems  to  be  favorable  in  all  but 
three  or  four  cases;  nor  does  there  appear  to  be  any  fric- 
tion with  other  municipal  departments.  Only  one  case  of 
direct  hostility  of  the  local  government  was  found  among 
the  private  plants,  and  in  many  instances  the  service  of 
the  companies  was  spoken  of  in  terms  of  highest  praise. 
In  several  places  business  men  in  general  were  evidently 
somewhat  dissatisfied  with  municipal  ownership;  but  no 
noticeable  dissatisfaction  was  found  so  far  as  the  other 
group  is  concerned,  except  that  in  two  or  three  cases  the 
prices  were  considered  too  high.  The  citizens  as  a  body, 
so  far  as  could  be  ascertained,  are,  with  probably  four  or 
five  excep  lions,  favorable  toward  public  ownership  where 
it  now  exists.    Only  two  cases  were  found  in  which  the 


S40 


MUNICIPAL  ELECTRIC  LIGHTING 


general  attitude  toward  the  private  plants  was  either 
unfavorable  or  doubtful. 

Politics,  at  one  time  or  other,  have  interfered  seriously 
in  at  least  four  municipal  plants,  and  probably  to  some 
extent  in  as  many  more.  In  three  or  four  cases  also  the 
companies  have  been  troubled  by  politics. 

While  there  is  in  ahnost  all  cases  a  gas  company  pres- 
ent in  the  territory,  the  relations  appear  to  be  for  the 
most  part  pleasant,  though  the  gas  people  are  frequently 
much  more  active  in  pushing  their  business  than  are  the 
electric  light  plants;  and  in  some  instances  the  former 
actually  seem  to  have  been  gaining  in  the  amount  of  house 
lighting  done.  In  the  case  of  the  private  plants,  however, 
in  eight  instances  out  of  thirteen  the  gas  is  supplied  either 
by  the  electric  plants  studied,  which  are  composite,  or  by 
companies  which  are  imder  the  same  ownership.  Under 
such  circumstances  there  is  not  much  opportunity  for 
real  comp>etition. 

All  of  the  companies  heard  from  in  any  way,  except 
one,  make  a  systematic  effort  to  get  new  business,  by 
means  of  soUciting,  advertising,  and  campaigns  of  various 
sorts.  Every  one  of  the  ten  actually  visited  has  a  show- 
room with  adequate  facilities.  Of  the  municipal  plants, 
however,  half  admit  that  they  make  no  effort  whatever 
to  secure  new  business,  usually  because  they  are  not  able 
to  take  care  of  what  business  they  already  have  in  a 
wholly  satisfactory  manner.  Some  rather  naively  state 
that  they  do  not  have  to  look  for  new  business  because 
the  territory  is  already  fully  developed,  or  because  their 
good  service  and  low  rates  are  a  sufficient  advertisement. 
Only  three  or  four  of  this  group  have  anything  which  even 
approaches  a  show-room.  The  remainder  either  keep  no 
appliances  on  hand  or  have  them  hidden  away  in  some 
corner  of  their  crowded  offices. 

In  comparatively  few  cases  do  the  public  plants  fur- 
nish the  major  portion  of  the  power  used  by  factories  in 


IN  MASSACHUSETTS 


341 


their  territory.  As  nearly  as  can  be  determined,  however, 
the  companies  make  a  somewhat  better  showing.  In  view 
of  the  fact  that  many  of  the  manufacturing  concerns  started 
business  before  the  local  Hghting  plants  were  installed, 
or  before  the  commercial  possibilities  of  central  station 
generation  were  fully  realized,  it  is  not  strange  that  many 
factories  in  either  case  are  not  supplied  with  power,  par- 
ticularly in  those  instances  in  which  the  demand  is  very 
large.   There  are  also  perfectly  good  reasons  why  it  may 
not  be  financially  expedient  for  an  electric  plant  to  in- 
crease its  equipment  sufficiently  to  take  on  very  large 
power  customers  unless  there  is  a  definite  guarantee  for 
a  period  of  years  which  will  be  high  enough  to  enable  a 
large  part  of  the  additional  investment  to  be  amortized. 
This  is  especially  true  in  the  case  of  new  and  untried  en- 
terprises or  in  the  case  of  those  factories  the  demand  for 
whose  product  is  occasioned  by  abnormal  conditions,  such 
as  war,  or  is  subject  to  the  vagaries  of  fashion,  or  is 
dependent  upon  the  good-will  of  a  comparatively  small 
group  of  consumers.    Yet  it  is  very   evident  that  the 
public  plants  have  been  much  more  cautious  than  the 
companies  in  this  regard,  demanding  in  many  cases  un- 
reasonably high   guarantees,  and   upon   the  whole   fre- 
quently assuming  an  attitude  of  careless  indifference.   In 
several  instances  it  was  clearly  demonstrated  that  valu- 
able business  has  been  kept  away  through  this  policy. 
Probably  the  same  thing  has  happened  in  other  cases, 
though  it  is  sometimes  difficult  to  prove  the  actual  occur- 
rence. At  any  rate,  in  many  instances,  the  public  plants 
could  now  rapidly  extend  their  power  business  if  they  had 
the  facilities  for  doing  so.  No  doubt  a  municipal  plant  is 
justified  in  running  no  risks;  but  the  customary  policy  is 
an  exceedingly  short-sighted  one,  if  the  welfare  of  all  the 
people  is  to  be  considered. 

As  to  the  future  development  of  business  in  their  terri- 
tory, all  except  one  or  two  of  the  companies  appear  to  have 


342 


MUNICIPAL  ELECTRIC  LIGHTING 


made  reasonably  adequate  preparation;  while  in  only  two 
or  three  instances  have  the  public  plants  which  are  still  gen- 
erating current  sufficiently  provided  for  the  future.  In  at 
least  half  of  the  plants  in  this  group  the  answer  must  be 
decidedly  *^No,"  and  in  several  others  it  is  very  doubtful. 

So  far  as  concerns  the  objections  to  the  present  system 
and  the  suggestion  of  needed  changes,  practically  all  of 
the  private  plants  answer  "None,"  though  one  (the  small- 
est of  all)  mentions  that  twenty-four-hour  service  is 
needed,  and  another  admits  the  desirability  of  a  general 
improvement  in  service.  Only  a  third  of  the  municipal 
plants,  however,  answer  "None"  to  this  question.  The 
remainder  admit  that  the  objections  and  needed  changes 
are  manifold,  among  which  may  be  listed  the  following: 
"More  capacity  needed,"  "Additional  lines  necessary," 
"Larger  units,"  "Entire  system  should  be  renewed," 
"Too  numerous  to  mention,"  "Administrative  changes," 
** General  objections,"  "More  liberal  financial  policy," 
"Less  cumbersome  financial  policy,"  "Do  away  with 
poHtics,"  "Street  lights  should  be  paid  for."  Probably 
these  complaints  of  the  managers  speak  for  themselves. 

The  reader  might  object  that  the  municipal  managers 
may  have  been  more  frank  in  their  admissions  than  the 
managers  of  the  companies.  This  is  a  reasonable  infer- 
ence. But  it  must  be  remembered  that  the  writer  most 
carefully  reviewed  the  entire  situation  from  all  angles 
and  secured  confirmatory  proof  of  all  statements  before 
drawing  any  conclusions.  Hence,  in  view  of  the  fact  that 
he  has  been  on  the  ground  personally  and  has  inspected 
the  plants  and  systems  which  are  here  discussed,  he  be- 
lieves that  the  picture  painted  is  as  accurate  as  a  reason- 
able, unbiased  judgment  can  make  it. 

In  several  instances  the  writer  discovered  a  well-marked 
desire  for  a  change  from  public  to  private  ownership, 
though  the  recently  passed   law  ^  and   the  local   pride 

»  Mass.,  1917,  ch.  205,  sect.  1. 


IN  MASSACHUSETTS 


343 


would  probably  prevent  any  transfer  being  made.  In 
two  cases  the  writer  knows  personally  of  negotiations 
which  have  been  entered  into  for  the  purpose  of  taking 
over  large  municipal  plants  by  private  interests,  having 
seen  some  of  the  estimates  which  had  been  drawn  up  in 
connection  therewith.  In  both  cases  the  incipient  nego- 
tiations fell  through  — in  one  instance  because  it  was 
found  that  no  deal  could  be  made  without  the  payment 
of  a  large  "sweetener"  to  the  municipal  authorities  by 
way  of  graft.  This,  however,  happened  before  the  law 
was  passed  requiring  the  same  sort  of  vote  to  be  taken 
for  abandoning  a  municipal  plant  as  for  acquiring  it.  In 
about  two  thirds  of  the  cases  in  this  group  municipal  own- 
ership in  a  general  way  is  termed  a  success  by  the  managers, 
and  in  the  others  the  answer  is  "  Not  a  success  "  or  "  Doubt- 
ful." The  reader  can  form  his  own  opinion  as  to  the  ade- 
quacy of  this  judgment. 

Most  of  the  companies  definitely  state  that  there  is 
no  noticeable  desire  for  a  change  to  public  ownership  in 
their  territory.  As  nearly  as  can  be  ascertained  by  care- 
ful inquiry,  they  have  put  the  case  correctly,  though  there 
are  one  or  two  reasonably  doubtful  cases.  The  accom- 
panying table  indicates  that  there  has  been  practically 
no  serious  agitation  for  municipal  ownership  in  the  com- 
panies studied  at  any  time.  Accordingly,  we  may  nat- 
urally expect  that  private  ownership  in  these  cases  has 
been  reasonably  successful  from  a  public  point  of  view. 
Only  one  or  two  suggestions  to  the  contrary  were  re- 
ceived; while  frequently  the  warmest  commendation  was 
volunteered  by  wholly  disinterested  parties.  The  follow- 
ing extracts  from  a  letter  received  by  the  writer  from  the 
mayor  of  one  of  the  cities  in  which  is  located  a  company 
under  consideration,  is  typical.  The  reference  is  to  one 
of  a  group  of  centrally  owned  plants. 

Although  I  have  no  connection,  financial  or  otherwise,  with 
any  of  the  companies  (beyond  being  a  private  consumer  in  my 
own  house),  I  am  very  familiar  with  their  organization  .... 


4 


MUNICIPAL  ELECTRIC  LIGHTING 


345 


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The  arrangement  has  met  with  general  approval,  I  think,  in 
all  of  the  municipalities  served.  The  rates  are  fair,  and  low. 
There  is  no  doubt  that  the  companies  have  made  a  good  deal 
of  money.  But  there  can  be  no  objection  to  this,  because  they 
have  thoroughly  modernized  all  of  their  plant  with  the  money 
they  have  made  from  the  consumers,  and  their  service  has  been 
of  a  very  high  order.  They  have  not  mixed  in  politics  in  any  way. 
Their  local  manager  was  for  some  time  interested  in  local  politics, 
he  having  served  in  our  City  Council;  but  his  interest  was  en- 
tirely personal,  and  his  service  to  the  city  was  of  value  to  it  much 
more  than  to  the  company  with  which  he  was  and  is  connected. 
He  is  a  good  business  man,  and  as  such  gave  freely  of  his  brains 
and  time  to  his  city.  .  .  . 

The  quality  of  service  is  first-class.  Every  complaint  is 
promptly  taken  up,  and  remedied  if  possible.  For  instance,  if  a 
police  officer  reports  a  street  light  not  burning,  a  man  is  at  once 
sent  to  the  spot  and  the  trouble  taken  care  of.  It  is  the  same  with 
private  complaints  of  private  services. 

Summary 

We  may  conclude  our  summing-up  of  the  more  impor- 
tant evidence  secured  in  the  local  survey  as  follows: 

1.  The  managers  of  municipal  electric  lighting  at  preS' 
ent  seem  to  be  in  most  cases  well  qualified  for  their  work, 
and  their  appointment  appears  to  have  been  usually  based 
upon  their  general  fitness. 

2.  Few  of  these  managers  belong  to  technical  societies 
of  any  sort. 

3.  With  a  few  exceptions,  there  is  no  evidence  that  they 
dabble  unduly  in  politics,  though  frequently  they  are 
somewhat  interfered  with  for  political  reasons. 

4.  The  salaries  of  the  managers  of  municipal  plants 
have  recently  been  considerably  increased,  and  in  the 
main  now  seem  to  compare  favorably  with  those  paid  to 
the  managers  of  companies. 

5.  Numerous  traces  of  dishonesty  on  the  part  of  munic- 
ipal managers  or  municipal  lighting  boards  can  be  found, 
though  probably  the  situation  is  not  much  worse,  with  a 
few  exceptions,  than  might  be  expected  under  private 
ownership. 


346 


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847 


C 


^y|4.: 


6.  The  managers  of  municipal  lighting  in  general  admit 
that  they  are  highly  dissatisfied  with  the  conditions  which 
they  are  forced  to  put  up  with  under  public  employment. 

7.  The  larger  the  municipality  owning  its  plant,  Hol- 
yoke  excepted,  the  more  numerous  in  general  are  the  evi- 
dences of  corruption  and  political  interference. 

8.  Wages  and  hours  of  labor  (usually  eight)  appear  to 
be  about  the  same  in  both  cases,  the  public  plants  having 
in  a  few  cases  shorter  hours. 

9.  The  conditions  of  employment  are  frequently  more 
pleasant  in  the  companies,  and  they,  in  the  main,  seem 
to  take  better  care  of  their  labor. 

10.  The  reasons  given  by  municipalities  for  acquiring 
their  plants  are  numerous,  but  most  of  them  seem  to  have 
been  moved  by  the  hope  of  financial  gains  of  some  sort. 

11.  Practically  all  of  the  companies  make  an  active 
attempt  to  get  new  business,  while  the  majority  of  the 
public  plants  frankly  admit  that  they  make  no  such  effort. 
They  let  business  come  to  them.  Though  few  of  the  latter 
do  any  advertising  or  make  use  of  show-rooms,  the  former 
do  so  almost  without  exception. 

12.  In  a  number  of  cases  the  available  evidence  points 
to  the  fact  that  desirable  business  has  been  kept  away 
from  municipalities  because  of  the  failure  of  their  pub- 
licly owned  plants  to  offer  adequate  facilities  for  the  sup- 
ply of  power.  Many  of  these  plants  could  also  greatly  in- 
crease their  power  business  at  the  present  time  if  they 
cared  to  do  so. 

13.  In  many  regards  a  number  of  the  municipal  plants 
were  laboring  under  serious  difficulties  at  the  time  of  this 
survey,  and  several  would  probably  have  been  glad  to 
change  to  private  ownership  had  it  not  been  for  the  legal 
complications.  On  the  other  hand,  there  seems  to  be  at 
present  little  serious  dissatisfaction  with  private  owner- 
ship in  the  places  served  by  the  companies. 


Brief  Conclusion 

Practically  all  of  the  data  secured  in  this  local  survey 
of  the  generating  plants  (as  outlined  in  this  and  the  pre- 
ceding chapter)  amply  confirm  the  tentative  conclusions 
reached  as  a  result  of  our  careful  analyses  of  the  statisti- 
cal material  given  in  the  annual  returns.  In  many  instances 
very  valuable  additional  information  has  been  collected. 
In  general,  the  findings  for  this  group  of  plants  would 
seem  to  indicate  clearly  that  public  ownership,  as  com- 
pared with  private  management  of  the  lighting  business 
in  Massachusetts,  leaves  much  to  be  desired.  It  may  be 
true,  however,  that  at  times  certain  not  readily  calculable 
gains  have  resulted. 


MUNICIPAL  ELECTRIC  LIGHTING 


349 


1 


CHAPTER  Xm 

THE  LOCAL  BACKGROUND  .*  PURCHASING  PLANTS 

The  purchasing  plants  furnish  little  additional  mate- 
rial of  interest;  but,  consistent  with  our  earlier  treatment, 
it  has  seemed  desirable  to  keep  the  results  of  the  local 
survey  of  these  plants  separate  from  those  of  the  generat- 
ing plants.  Accordingly,  in  the  present  chapter  a  very 
brief  account  will  be  given  of  this  group  in  so  far  as  the 
schedule  applies  or  as  it  may  seem  necessary.  As  none 
of  the  municipal  plants  under  consideration  have  ever 
generated  current,  and  as  all  of  the  companies  which  for- 
meriy  generated  have  definitely  stopped  this  activity, 
many  having  disposed  of  their  equipment,  there  is  nothing 
to  say  regarding  the  central  station. 

1.  Distribution 

In  the  matter  of  topography  and  geography  it  appears 
that  there  is  little  difference  in  the  conditions  surrounding 
the  two  groups  of  plants.  In  practically  all  cases  the  con- 
ditions would  be  considered  normal. 

Half  of  the  companies  claim  to  extend  their  lines  accord- 
ing to  the  demand,  and  about  half  say  that  they  think 
first  of  financial  considerations.  Some  of  the  pubHc  plants 
also  make  extensions  to  meet  the  demand;  but  the  an- 
swers usually  given  to  this  question  are,  "By  vote  of  the 
town,"  "Board  decides,"  "For  a  reasonable  return,"  etc. 
Probably  neither  group  takes  on  unprofitable  customers 
when  it  can  be  avoided.  Extensions,  when  finally  decided 
upon,  are,  so  far  as  known,  made  with  reasonable  prompt- 
ness in  both  cases,  though  there  is  some  evidence  to  point 
to  the  presumption  that  the  municipal  plants  do  not  over- 
exert themselves.  In  a  considerable  number  of  the  latter, 


and  in  one  or  two  cases  in  the  companies,  the  customers 
bear  a  part  of  the  cost  of  extension,  particularly  on  pri- 
vate land.  The  construction  thus  paid  for  does  not  in 
many  cases  appear  to  be  charged  to  the  capital  account. 
A  large  proportion  of  the  companies  let  out  their  exten- 
sion work  to  contractors,  while  the  municipal  plants  usu- 
ally do  the  work  themselves.  This  probably  accounts  in 
no  small  measm-e  for  the  somewhat  lower  construction 
accounts  of  the  latter,  for  not  only  is  the  total  cost  of  a 
piece  of  work  thus  done  frequently  lower,  but  often,  as 
indicated  in  an  earlier  chapter,  the  labor  used  in  new  con- 
struction is  charged  up  to  operating  expenses. 

It  was  difficult  in  this  case,  as  in  the  generating  plants, 
to  find  out  with  accuracy  how  many  poles  are  actually 
owned  and  how  many  foreign  poles  are  used.  It  appears, 
however,  that  the  writer  was  partially  wrong  in  his  earlier 
inference  from  the  returns  to  the  effect  that  the  public 
purchasing  plants  own  practically  all  of  the  poles  which 
they  use.  The  proportion  seems  to  be  little  higher  than 
in  the  case  of  the  generating  plants,  though  the  companies 
of  this  group  own  comparatively  a  larger  number.  Prac- 
tically none  of  the  municipal  plants  pay  any  pole  rent, 
while  ahnost  all  of  the  companies  must  provide  for  this 

item  of  expense. 

The  larger  plants  in  each  group  have  a  fairly  accurate 
knowledge  of  the  length  of  their  fines  and  streets  with 
overhead  lines,  secured  through  actual  measurement  or 
by  scaling  from  blue-prints  of  the  town.  For  the  smaller 
plants  of  recent  installation  the  length  given  is  also  ap- 
proximately correct.  Few  in  either  case  have  a  satisfac- 
tory map  of  the  distributing  system.  Connected  load  is,  as 
would  be  expected,  merely  a  rough  estimate  in  most  cases. 

In  general  it  is  probably  true  that  the  distributing  sys- 
tem of  both  groups  is  at  present  as  good  as  would  be  ex- 
pected in  plants  of  this  size,  though  some  of  the  very  small 
public  plants  have  installed  slim  and  inferior  poles  and 


S5a 


MUNICIP.VL  ELECTKIC  LIGHTING 


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351 


'ill 


have  used  wire  which  is  not  up  to  standard.  On  the  other 
hand,  some  of  the  companies  had  an  unsatisfactory  original 
installation.  There  is  little  uniformity  in  the  practice  of 
line  inspection.  Most  of  the  private  plants  simply  reply, 
"Constant."  Answers  from  the  other  group  are,  "Con- 
stant," "Variable,"  "Very  often,"  "Monthly,"  "Never." 

2.  Consumption 

Only  one  municipal  plant  appears  to  test  customers' 
meters  with  any  regularity,  five  out  of  ten  answer,  "No," 
while  the  remainder  say,  "When  needed,"  or  "On  com- 
plaint." Five  of  the  companies  report  regular  tests,  and 
regarding  the  others  the  writer  has  no  definite  informa- 
tion. Complaints  are  said  to  be  handled  with  reasonable 
promptness  in  most  cases. 

Practically  all  of  the  companies  sell  appliances,  most 
having  show-rooms  of  some  sort  in  connection  with  their 
oflBces,  and  a  number  deal  in  fixtures.  Only  the  larger 
public  plants  do  a  business  of  this  sort.  The  usual  sale 
price  is  at  a  slight  advance  over  cost. 

Special  rates  to  large  consumers  are  made  by  two  or 
three  of  the  companies,  but  no  such  cases  were  found 
among  the  other  group.  All  of  the  private  plants  except 
two  report  general  satisfaction  wdth  rates.  In  two  other 
cases,  however,  the  matter  is  open  to  question.  Of  the 
municipal  plants  in  only  one  case  was  it  definitely  sug- 
gested that  the  rates  are  too  high.  Among  the  plants  here 
under  consideration  there  has  been  since  1910  only  one 
petition  to  the  State  Board  for  the  reduction  of  prices,  — 
in  one  of  the  companies,  —  and  that  was  favorably  acted 
upon.  But  there  have  been  numerous  voluntary  reduc- 
tions in  both  groups,  —  for  the  companies,  thirteen  cases 
in  eight  different  plants,  and  for  the  municipalities,  seven- 
teen cases  in  ten  different  plants. 

In  the  companies  all  accounts,  so  far  as  ascertained,  are 
collected  monthly,  as  is  also  the  case  in  all  of  the  larger 


public  plants.  The  writer  has  been  indirectly  informed, 
however,  that  in  a  number  of  the  smaller  municipal  plants 
collections  are  bi-monthly  or  even  quarterly.  In  all  cases 
heard  from,  except  one,  the  payments  are  made  to  the 
managers  of  the  latter  group,  and  not  to  the  town  treasurer 
as  is  sometimes  suggested.  It  may  well  be  that  there  are 
more  exceptions  of  this  kind. 

3.  Financial  Considerations 

As  most  of  the  companies  are  under  central  control  they 
have  frequent  and  systematic  audits.  The  municipal 
plants  are  audited  for  the  most  part  annually,  usually  by 
the  public  auditor,  the  town  bearing  the  charge.  In  two 
cases,  however,  a  certified  public  accountant,  paid  by 
the  department,  does  the  work,  and  in  one  instance  the 
manager  himself  secures  and  pays  for  an  outside  party. 

No  important  case  of  free  service  rendered  to  the  mu- 
nicipality, aside  from  street  fighting,  was  found,  though 
in  two  instances  a  very  low  special  rate  is  made  to  the  town 
for  power  used  in  pumping  water.  Other  current  supplied 
is  customarily  paid  for  at  the  usual  rates.  Nor,  in  the 
plants  from  which  data  have  been  secured,  does  any  con- 
siderable free  service  seem  to  be  received  from  other 
municipal  departments.  With  one  exception,  no  portion 
of  the  salary  of  the  town  treasurer  or  the  soficitor  is  paid 
for.  In  a  few  cases  public  land  is  used  without  payment 
of  rental,  and  in  numerous  plants,  probably  in  the  ma- 
jority, free  offices  are  enjoyed  in  the  town  hall.  In  at  least 
half  of  this  group  of  pubHc  plants,  the  town  pays  for  part 
or  all  of  the  insurance  carried.  The  customary  policy 
seems  to  be  to  take  out  a  blanket  insurance  on  all  public 
property.  Under  the  circumstances  it  is  hardly  worth 
while  to  attempt  an  estimate  of  the  value  of  the  free  serv- 
ice received,  for  it  would  certainly  not  amount  to  more 
than  a  few  thousand  dollars,  provided  the  services  fre- 
quently contributed  by  the  manager  be  not  included. 


S52 


MUNICIPAL  ELECTRIC  LIGHTING 


Pifi 


None  of  the  municipal  plants  are  carrying  any  dead 
investment  worth  mentioning.  But  ten  of  the  eleven  com- 
panies which  formerly  generated  current  have  amounts 
ranging  in  different  cases  from  $1,000  to  perhaps  $70,000 
invested  in  equipment  or  real  estate  which  are  now,  and 
probably  always  will  be,  either  useless  or  at  least  wholly 
unnecessary  for  the  successful  conduct  of  their  business. 
The  total  amount  thus  carried  is  approximately  between 
$175,000  and  $200,000. 

With  two  or  three  exceptions  in  either  case  there  does 
not  appear  to  have  been  serious  waste  or  extravagance  in 
investment  or  operation,  while  the  financial  policy  has 
doubtless  been  reasonably  liberal  in  the  majority  of  cases. 
Nothing  is  spent  by  any  of  the  municipal  plants  for  adver- 
tising or  getting  new  business,  and  a  comparatively  small 
amount  by  the  companies. 

The  accounts  of  the  small  public  plants  are  extremely 
simple,  and  the  opportunities  for  dishonesty  are  practi- 
caUy  nil.  In  spite  of  the  requirements  of  the  State  law,* 
according  to  the  returns  of  1915  there  were  six  managers 
not  under  bond. 

4.  The  Management 

The  municipal  light  boards  in  a  majority  of  the  cases 
under  consideration  may  be  characterized  as  non-partisan, 
for  no  one  ever  seems  to  think  of  the  pohtical  afi&liations 
of  the  members.  In  two  plants  there  is  no  board,  and  in 
several  cases  the  manager  is  one  of  the  members.  In  few 
instances  is  there  any  technical  knowledge  represented  on 
the  board. 

The  manager  is  ordinarily  appointed  for  a  term  of  one 
year,  but  in  most  cases  the  tenure  is  in  reality  indefinite. 
A  number  have  been  with  their  plant  since  its  installa- 
tion. There  does  not  seem  to  be  any  fixed  basis  for  select- 
ing a  manager.   While  some  suggest  "ability"  or  "fitness 

»  Mass.,  1914,  ch.  7ii,  sect.  113. 


IN  MASSACHUSETTS 


353 


for  the  work"  as  a  criterion,  others  are  apparently  glad 
to  secure  the  services  of  any  citizen  who  is  willing  to  do 
the  work  cheaply  or  even  without  compensation. 

One  manager  was  discovered  who  is  a  technical  grad- 
uate. The  others  have  had  a  varied  preparation,  the  an- 
swers to  this  question  being,  "No  preparation,"  "Trained 
in  the  plant,"  "Business  college,"  "Private  study  of  elec- 
tricity," "Training  in  a  private  plant,"  etc.  So  far  as 
could  be  discovered  there  is  only  one  manager  of  these 
municipal  plants  who  belongs  to  a  technical  society,  and 
the  numbers  among  the  companies  are  very  few. 

The  municipal  managers  of  lighting  are  usually  given 
a  free  hand  so  far  as  the  actual  operation  of  the  plant 
goes;  but  they  are  carefully  restricted  by  the  municipal 
board  in  the  purchasing  of  material.  Only  a  few  cases  of 
probable  dishonesty  were  found,  and  politics  seem  as  a 
general  thing  to  have  been  conspicuous  by  reason  of  their 
absence. 

As  might  be  expected,  the  general  run  of  managers  of 
this  group  of  public  plants  are  men  of  small  caliber, 
though  there  are  a  number  of  outstanding  exceptions.  As 
indicated  by  letters  to  the  writer  and  to  the  Board  of  Gas 
and  Electric  Light  Commissioners,  many  are  wholly  un- 
trained either  for  business  or  for  anything  else.  Yet,  due 
to  the  patient  attention  and  assistance  which  has  been 
given  them  by  the  State,  they  have  managed  to  correct 
many  of  their  earlier  mistakes,  so  that  now  they  get  on 
reasonably  well.  In  only  four  cases  do  the  managers  of 
municipal  plants  devote  all  of  their  time  to  the  fighting 
department,  while  practically  all  of  the  managers  of  pri- 
vate plants  must  of  necessity  do  so.  Hence,  it  is  not  to 
be  wondered  at  that  the  operating  expenses  of  the  com- 
panies tend  to  be  relatively  higher  than  those  of  the  other 
group,  which  frequently  pay  nothing  at  all  for  manage- 
ment. 


354  MUNICIPAL  ELECTRIC  LIGHTING 

5.  The  Employees 

In  the  average  plant  of  the  present  group  so  few  lab- 
orers are  employed  that  it  hardly  seems  worth  while  to 
devote  any  time  to  a  discussion  of  this  part  of  the  schedule, 
for  few  of  the  questions  really  apply.  In  many  instances, 
particularly  in  the  public  plants,  the  manager  is  the  fac- 
totum, performing  all  the  work  that  needs  to  be  done  in 
his  spare  time.  Most  of  the  other  employees  of  the  munic- 
ipal plants,  at  any  rate,  are  little  more  than  ordinary 
day  laborers,  and  the  wages  paid  are  correspondingly  low. 
In  most  cases  they  work  only  part  time.  Occasionally 
the  services  of  employees  of  other  municipal  departments 
are  utilized,  as  it  is  otherwise  difficult  to  secure  help  when 
needed. 

In  the  majority  of  cases  the  usual  working  day  is  eight 
hours,  though  the  question  of  the  time  worked  is  not  of 
much  consequence  on  account  of  the  fragmentary  charac- 
ter of  the  work.  While  in  many  cases  the  ordinary  holi- 
days are  allowed  with  pay,  and  frequently  vacations  are 
granted,  it  is  not  customary  for  the  municipal  plants,  at 
any  rate,  to  give  pay  to  employees  during  periods  of  sick- 
ness. 

6.  General  Considerations 
In  thirteen  cases  out  of  twenty-one  in  this  group  the 
municipalities  entered  upon  the  lighting  business  because 
there  was  at  the  time  no  electric  service  in  the  territory. 
In  some  places,  to  be  sure,  companies  which  might  have 
been  glad  to  extend  their  services  were  kept  out;  but  for 
the  most  part  there  was  little  in  the  situation  to  attract 
private  enterprise,  if  five  or  six  of  the  larger  plants  be 
barred.  Of  other  answers  gleaned  from  the  survey,  to  the 
question  regarding  the  reason  for  acquiring  a  plant,  the 
following  are  suggestive:  "To  get  satisfactory  service," 
"To  save  money,"   "To   secure   good   street  lighting," 


IN  MASSACHUSETTS 


S55 


"Recommended  by  the  investigating  committee,"  "Desire 
for  municipal  ownership." 

At  the  present  time  there  appears  to  be  little  opposition 
encountered  by  either  group  of  plants  from  the  municipal 
government,  the  business  men,  or  the  citizens  in  general. 
Formerly  there  was  some  dissatisfaction  in  two  or  three 
cases  both  for  the  companies  and  for  the  public  plants. 

As  stated  in  an  earlier  chapter  there  is  no  gas  competi- 
tion in  thirteen  of  the  municipal  plants,  while  there  is  gas 
in  the  territory  of  all  but  six  of  the  companies.  Practi- 
cally all  of  the  latter  make  some  effort  to  secure  new 
business,  by  means  of  advertising,  soliciting,  and  display 
of  appliances.  In  no  instance  did  the  manager  of  a  munic- 
ipal plant  say  that  any  definite  attempt  is  made  to  push 
business,  though  where  gas  is  present  there  is  some  rivalry. 
In  a  few  cases  the  territory  is  already  well  developed,  and 
usually  the  new  customers  seem  to  come  as  rapidly  as  the 
town  is  ready  to  take  care  of  them.  As  long  as  the  current 
is  purchased,  the  question  of  the  load  factor  —  which,  by 
the  way,  is  never  computed  —  rarely  worries  those  in 
charge  of  municipal  plants. 

As  there  are  not  many  industries  in  the  districts  served 
by  this  group,  and  as  the  amount  of  power  suppHed  by  a 
purchasing  plant  depends  pretty  largely  upon  the  con- 
ditions at  the  source  of  supply,  i.e.,  the  selling  plant,  the 
question  of  the  discouragement  of  new  enterprises  be- 
cause of  lack  of  facilities  is  not  important.  Also,  for  a 
similar  reason,  it  can  probably  be  said  that  the  future 
development  of  business  has  been  adequately  provided 
for. 

The  companies  suggest  little  criticism  of  their  present 
system,  and  only  scattering  complaints  were  received 
from  the  municipalities,  though  probably  many  of  the 
suggestions  made  regarding  the  generating  plants  would 
apply  here  as  well.  Aside  from  the  negligible  cases  indi- 
cated in  a  preceding  table,  there  appears  to  be  no  notice- 


j 


356 


MUNICIPAL  ELECTRIC  LIGHTING 


able  dissatisfaction  with  the  present  state  of  affairs  in 
either  group  and  no  desire  for  a  change  of  ownership. 
Each  community  is  either  performing  or  having  performed 
for  itself  that  service  which  it  desires,  in  a  manner  which 
meets  with  the  general  approval.  No  important  issues 
seem  to  be  involved  in  the  case  of  these  small  plants  other 
than  those  which  have  already  been  suggested. 

SUMMABT 

Little  that  is  new  can  be  gleaned  from  the  local  survey 
of  these  purchasing  plants.  In  many  regards  there  does 
not  seem  to  be  much  to  choose  between  the  two  groups. 
However,  the  following  facts  stand  out: 

1.  The  municipal  plants  now  appear  to  be  following  in 
general  a  more  cautious  policy  in  making  extensions,  and 
they  frequently  put  a  good  deal  of  the  cost  on  the  cus- 
tomer. 

2.  The  public  plants  do  not  usually  sell  any  appliances, 
and  rarely  make  any  attempts  to  get  new  business.  Per- 
haps it  has  not  till  now  been  necessary  to  do  so,  though 
it  will  be  remembered  that  their  power  load  is  much 
poorer  than  that  of  the  private  plants. 

3.  The  general  business  and  financial  policy  of  the  com- 
panies, due  to  the  fact  that  they  are  centrally  controlled, 
appears  in  most  respects  to  be  more  systematic  than  that 
of  the  other  group. 

4.  An  appreciable  amount  of  free  service  is  received  by 
the  public  plants  from  their  municipalities. 

5.  The  large  investment  in  "dead  assets"  ($175,000  to 
$200,000)  of  the  companies  is  for  the  most  part  a  com- 
plete loss,  and,  from  the  nature  of  the  case,  could  not  well 
have  been  avoided.  The  pubhc  plants,  due  to  their  more 
recent  installation,  have  been  more  fortunate  in  this  re- 
gard. 

6.  The  managers  of  these  municipal  plants,  four  or  five 
of  the  larger  ones  excepted,  are  usually  men  of  small 


IN  MASSACHUSETTS 


357 


capacity  who  give  their  services  to  the  public  for  an  in- 
adequate compensation,  or  gratis, 

7.  The  labor  problem  is  insignificant,  as  the  manager 
is  frequently  the  only  employee,  and  he  rarely  gives  all 
of  his  time  to  the  work. 

8.  In  most  cases  the  municipalities  acquired  their 
plants  because  otherwise  they  would  have  had  no  elec- 
trical service.  In  a  few  instances,  however,  on  account  of 
the  excellence  of  the  territory,  there  was  probably  a  hope 
of  financial  gain  of  some  kind. 

9.  Politics  seem  to  have  been  conspicuously  absent  in 
these  small  public  plants;  and  the  two  groups  of  communi- 
ties,  barring  one  or  two  pla<«s  served  by  companies,  seem 
at  present  to  be  well  satisfied  with  that  form  of  ownership 
which  they  now  chance  to  have. 

10.  The  comparative  success  of  this  group  of  public 
plants  is  due  in  large  measure  to  the  attention  given  them 
by  the  State  Board  of  Gas  and  Electric  Light  Commis- 
sioners, rather  than  to  their  Own  unaided  efforts.  The  cor- 
responding companies,  on  the  other  hand,  while  they  leave 
much  to  be  desired,  have  probably  been  benefited  by  the 
systematization  which  has  recently  come  from  "central 
control";  and,  economically,  it  would  no  doubt  have  been 
better  had  they  never  been  carried  on  as  separate  concerns. 


■i'^i 


CHAPTER  XIV 


CONCLUSION 


The  chief  purpose  of  this  study  has  been,  first,  to  inter- 
pret the  data  which  appear  in  the  annual  returns  of  the 
two  groups  of  electric  plants  under  consideration,  and, 
secondly,  by  means  of  carefully  conducted  local  surveys 
to  test  the  tentative  conclusions  reached  by  the  first 
method  as  weU  as  to  collect  additional  information  of  a 
highly  valuable  sort  not  to  be  found  in  any  written  rec- 
ords, —  all  with  a  view  to  ascertaining,  as  nearly  as  a  sci- 
entifically impartial  yet  wholly  sympathetic  investigation 
can  reveal,  how  municipal  electric  lighting  in  Massachu- 
setts compares  with  private  enterprise  in  the  same  field. 
It  is  hoped,  however,  that  the  methods  of  research  herein 
developed  and  the  conclusions  thus  cautiously  arrived  at, 
will  be  of  more  than  passing  value  to  the  great  group  of 
thinking  men,  whether  engaged  in  private  business  or  in 
the  public  service,  who  really  take  an  intelligent  interest 
in  the  numerous  problems  of  pubhc  industry. 

While  throughout  this  study  the  writer  has  honestly 
endeavored  to  keep  an  open  mind  on  the  question,  there 
remains,  of  course,  some  shght  possibihty  of  error,  even 
when  the  local  background  is  accurately  known.  Every 
attempt,  however,  has  been  made  to  ehminate  the  dis- 
turbing factors,  to  make  reasonable  allowances  when 
necessary,  and  always  to  keep  the  data  as  nearly  compar- 
able as  circumstances  will  permit.  The  intangible  items 
in  such  a  problem  as  this  are  somewhat  difficult  to  evalu- 
ate, even  after  they  have  been  discovered.  Yet  it  does  not 
seem  probable,  in  view  of  the  double  check  that  is  afforded 
by  the  local  survey  and  by  the  various  methods  of  statisti- 
cal approach,  that  the  findings  herein  outUned  can  be  far 


MUNICIPAL  ELECTRIC  LIGHTING 


359 


wrong.  It  must  also  be  recalled  in  this  connection  that,  as 
was  stated  in  the  very  beginning  of  our  study,  public  busi- 
ness has  been  compared  with  private  business  at  its  tvorst  in 
the  State,  from  which  fact  the  reader  is  at  liberty  to 
draw  what  inferences  he  may  choose. 

Most  of  the  conclusions  reached  have  been  from  time 
to  time  suggested  as  the  several  items  were  under  discus- 
sion. Accordingly,  the  reader  should  be  permitted  to  de- 
cide for  himself  as  to  whether  or  not  the  conditions  which 
have  been  indicated  are  such  as  to  make  out  a  clear  case 
for  or  against  municipal  ownership  in  this  particular  in- 
dustry. Here,  then,  may  be  summed  up  briefly  the  results 
of  the  present  investigation;  and  it  will  not  be  amiss  for 
the  writer  to  make  certain  suggestions  which,  as  he  be- 
lieves, might  with  profit  be  considered  by  the  Massachu- 
setts Board  of  Gas  and  Electric  Light  Commissioners,  by 
other  State  conmussions,  and  by  the  municipalities  them- 
selves. 

In  the  first  place,  it  appears  that  the  conditions  under 
which  the  municipal  generating  plants  are  operating,  both 
natural  and  artificial,  are  far  more  favorable  to  success 
than  is  the  case  in  the  corresponding  group  of  companies. 
They  serve  a  more  densely  populated  territory,  in  which 
relatively  more  manufacturing  is  done  than  in  the  dis- 
tricts supplied  by  the  other  group.  Nor  does  their  history 
indicate  that  they  have  in  general  been  instrumental  in 
promoting  the  higher  industrial  development  here  found. 

When  the  pragmatic  test  is  applied,  it  becomes  evident 
that,  from  the  physical,  financial,  and  developmental  point 
of  view,  when  due  allowances  have  been  made,  this  group 
of  public  plants  (Holyoke  excepted),  have,  in  the  more  im- 
portant respects,  usually  lagged  somewhat  behind  the  pri- 
vate plants  studied.  They  seem  not  to  be  serving  their 
more  favorable  territory  so  adequately  as  are  the  latter, 
nor  have  they  made  any  attempt  to  develop  new  territory. 
They  have  probably  tended  to  be  too  conservative  in  their 


360 


IHUNICIPAL  ELECTRIC  LIGHTING 


IN  MASSACHUSETTS 


361 


extension  policy,  and,  with  a  very  few  exceptions,  have 
taken  little  thought  regarding  the  future  development  of 
business,  in  so  far  as  their  station  equipment  is  concerned. 
Their  aim  seems  to  have  been  to  follow  rather  than  to  lead 
the  growth  of  industry  and  the  new  demands  for  service. 
This,  however,  may  be  a  far  more  correct  policy  for  a 
public  industry  to  pursue  than  one  of  reckless  expansion 
which  sometimes  characterizes  the  conduct  of  private  en- 
terprise. 

In  a  financial  way  they  have  recently,  for  the  most  part, 
been  doing  reasonably  well  —  a  condition  of  affairs  due 
to  over-conservatism  rather  than  to  superior  efficiency. 
The  operating  accounts  and  balance  sheets  make  a  much 
better  showing  for  municipal  ownership  than  do  the  phys- 
ical features  of  the  business,  which  are  not  so  easily  dis- 
covered, but  which,  when  properly  studied,  furnish  us 
with  far  more  accurate  tests  than  can  be  applied  by  means 
of  a  superficial  survey  of  rates  and  balance  sheets.  Though 
the  earlier  deficits  are  generally  being  made  good,  the 
quaUty  of  the  service  rendered  has,  in  many  cases,  ap- 
peared to  suffer  as  a  result. 

Upon  the  whole,  while  this  group  of  plants  have  by  no 
means  been  altogether  failures,  it  cannot  be  truthfully 
asserted  that,  when  all  elements  in  the  problem  are  con- 
mdered,  they  have  been  any  conspicuous  success.  With 
one  or  two  exceptions  they  seem  simply  to  be  performing 
for  themselves,  with  httle  or  no  return  except  the  satisfac- 
tion derived  from  their  exertions,  those  services  which 
might  have  been  rendered  equally  well,  if  not  better,  by 
private  enterprise. 

Fortunately  these  municipal  plants  have  been  in  the 
main  comparatively  free  from  most  of  the  sinister  influ- 
ences which  frequently  beset  pubhc  business  of  this  kind. 
Yet,  barring  Holyoke,  careful  investigation  has  revealed 
the  fact  that  the  larger  the  city  having  its  own  plant,  the 
greater  is  the  danger  from  "pohtics"  and  "graft."  In  at 


least  one  unusually  important  case  the  conditions  have 
been  disgusting  beyond  belief;  while  in  two  other  large 
plants,  in  the  past  at  any  rate,  the  situation  has  been,  to 
say  the  least,  highly  unpleasant. 

Nor  is  the  outlook  a  propitious  one.  Not  a  municipal 
generating  plant  has  been  installed  since  1904,  though 
eighteen  purchasing  plants  have  begun  operation  since 
1907.  There  is  a  marked  tendency  in  both  groups  in  favor 
of  purchasing  current  from  large  private  concerns  and 
doing  only  a  distributing  business.  Already  three  of  the 
companies  studied  for  the  year  1914-15  have  ceased  the 
generation  of  current;  but  within  the  same  time  seven  mu- 
nicipal plants  have  for  the  present,  and  probably  for  all 
time,  stopped  the  production  of  current.  And,  in  spite  of 
the  great  loss  which  will  result  to  the  community  if  a  pub- 
lic plant  be  "scrapped,"  and  notwithstanding  the  greatly 
increased  cost  of  street  lighting  which  must  be  borne,  it 
would  probably  be  far  more  economical  in  many  cases  to 
follow  this  poHcy  than  to  overhaul  the  old  plants  and  equip 
them  for  future  needs. 

In  some  respects  a  marked  contrast  is  afforded  by  the 
municipal  plants  which  operate  only  a  distributing  sys- 
tem. For  them,  the  conditions  seem  to  be  in  large  measure 
reversed.  They  have,  in  many  instances,  commenced 
operation  in  districts  which  could  offer  small  inducement 
to  private  concerns,  and  it  might  appear  that  they  would 
accordingly  have  little  possibility  of  success.  Yet,  as  a 
result  of  the  united  public  sentiment  back  of  them,  and 
by  reason  of  the  careful  supervision  of  the  Board  in  count- 
less details,  they  have  made  an  unusually  good  showing  as 
contrasted  with  the  purchasing  companies. 

As  would  naturally  be  the  case  by  reason  of  their  more 
recent  installation,  this  group  of  public  plants  is  burdened 
with  a  far  lower  investment  than  are  the  private  plants. 
As  they  have  never  generated  any  current,  they  have  had 
no  opportunity  to  accumulate  a  larger  proportion  of  "dead 


se^ 


MUNICIPAL  ELECTRIC  LIGHTING 


assets."  In  fact,  the  relations  existing  between  the  two, 
in  this  regard,  are  such  that  it  seems  almost  futile  to  at- 
tempt comparisons.  But,  measured  by  the  tests  which 
it  is  customary  to  apply,  they  appear  to  have  been  mak- 
ing a  better  record,  under  less  favorable  geographical  and 
business  conditions,  than  have  the  other  plants.  To  be 
sure,  they  have  not  really  made  anything  in  a  financial 
way  —  they  have,  upon  the  whole,  simply  kept  even  with 
the  game.  They  are  still  young,  and  in  the  years  to  come, 
when  repairs  and  renewals  become  urgent,  the  operating  ex- 
penses can  be  expected  to  mount  rapidly.  A  good  share  of 
their  success  also  is  due  to  the  fact  that  they  are  dependent 
upon  private  enterprise  for  that  portion  of  the  business 
which  is  most  difficult  to  be  handled  by  public  officials 
and  employees.  All  credit  is  due  them,  however,  inasmuch 
as  they  have  been  rendering,  at  a  comparatively  low  cost, 
service  which  would  in  many  cases  have  been  difficult  if 
not  impossible  to  secure  from  private  concerns. 

Finally,  the  writer  believes  that,  under  such  effective 
regulation  of  the  electric  light  and  power  business  as  is 
found  in  Massachusetts  at  present,  there  is  no  reason 
whatever  why  a  municipality  should  invest  in  an  electric 
plant,  certainly  not  in  a  generating  plant.  No  real  econo- 
mies are  likely  to  be  thereby  effected,  and  the  possibility 
of  loss  is  great.  There  may  be  instances  in  which  pubUc 
ownership  of  merely  a  distributing  system  is  highly  desir- 
able. Yet,  this  form  of  ownership,  also,  from  an  economic 
point  of  view,  is  justified  only  when  private  business  can- 
not be  induced  to  enter  the  field  except  at  prohibitive 
rates.  The  day  has  long  passed  when  there  is  no  alterna- 
tive between  unrestricted  private  industry,  on  the  one 
hand,  and  public  ownership  on  the  other.  There  now  seems 
to  be  no  valid  reason  for  using  the  taxpayers'  money  for 
the  sake  of  doing  what  can  be  as  well  done  without  adding 
to  the  ever-increasing  municipal  debt.  The  burden  of 
proof  clearly  rests  upon  those  who  would,  under  the  cir- 


IN  MASSACHUSETTS 


S63 


cumstances,  advocate  a  further  municipalization  of  the 
industry  in  this  State. 

To  be  sure,  there  is  another  side  to  the  problem,  which 
must  not  be  overlooked.  While  it  may  not  be  desirable 
as  a  general  policy  for  municipalities  to  acquire  their  own 
plants,  it  is  certainly  beneficial  for  all  concerned  to  have 
a  State  law  enabling  them  to  do  so  if  they  choose.  The 
possibility  of  public  ownership  frequently  "puts  the  fear 
of  God"  in  the  hearts  of  those  who  might  otherwise  at 
times  forget  that  a  public  utility  enjoys  a  certain  monop- 
oly advantage,  granted  by  the  people,  and  for  which,  ac- 
cordingly, it  owes  much  to  the  people  in  return.  Further- 
more, a  few  examples  of  even  reasonably  successful  public 
ownership  may  act  somewhat  as  a  spur  to  those  in  private 
business,  causing  them  to  put  forth  more  effort  to  live  up 
to  their  opportunities.  Hence,  while  public  ownership 
might  be  a  questionable  experiment  to  attempt  on  a  larger 
scale,  and  while  it  has  doubtless  been,  in  many  cases, 
wholly  unnecessary  in  this  State,  yet  the  fact  that  both 
kinds  of  ownership  have  existed  side  by  side  in  the  past, 
has  probably  been  of  considerable  value  to  both  public 
and  private  business.  And,  at  any  rate,  the  study  of  the 
situation  in  this  State  has  afforded  unusually  valuable 
data,  which  may  serve  as  a  guide  to  those  who  in  the  fu- 
ture wish  to  municipalize  or  nationalize  our  public  utili- 
ties. 

No  attempt  is  made  at  this  point  to  draw  any  conclu- 
sions regarding  the  private  plants  in  the  State,  for  two 
reasons:  first,  those  companies  studied  are  scarcely  large 
enough  to  be  typical  of  private  electric  light  and  ix)wer 
business  in  Massachusetts,  and,  secondly,  this  is  meant  to 
be  a  study  of  municipal  ownership  and  not  of  private  enter- 
prise. From  the  data  which  have  been  collected,  presented, 
and  discussed  without  prejudice,  it  is  preferable  for  the 
reader  to  make  his  own  judgments. 

It  is  fairly  obvious,  however,  that,  upon  the  whole,  the 


I 


S64 


IVOJNICIPAL  ELECTRIC  LIGHTING 


larger  companies  studied,  though  they  are  often  far  from 
ideal,  have  made  a  considerably  better  showing  than  have 
the  municipal  plants.  While  there  may  have  been  some 
mismanagement  and  even  exploitation  in  the  past  in  one 
or  two  cases,  there  seems  to  be  little  real  ground  for  com- 
plaint at  present.  It  is  also  an  open  question  whether  the 
recent  agitation  by  the  Commissioners  against  the  increas- 
ing central  control  of  lighting  companies,  is  now  wholly 
justified  by  the  facts,  unless  in  the  case  of  the  purchasing 
plants.  While  there  are  doubtless  exceptions,  it  may  well 
be  that  the  increased  skill  in  operating,  together  with  the 
superior  guidance  and  more  effective  bargaining  power 
which  are  thus  secured,  far  outweighs  the  additional  finan- 
cial burdens  which  such  a  policy  entails.  Frequently,  also, 
the  customary  regulation  may  have  induced  horizontal 
combination  in  self-defense.  At  any  rate,  the  writer's  in- 
vestigations have  led  him  to  believe  that,  at  present,  the 
public  can  in  general  hope  for  more  ready  and  intelligent 
service  from  the  plants  under  group  control,  'properly  regu- 
lated^ than  from  those  independently  owned  and  operated. 
This  observation,  however,  is  not  in  any  sense  intended 
to  be  more  than  a  tentative  conclusion  on  the  matter,  for 
it  is  not  here  possible  to  make  a  detailed  analysis  of  all 
of  the  factors  involved. 

In  conclusion,  it  is  not  unfitting  for  the  writer  to  make 
a  few  suggestions  as  to  the  poHcy  which,  in  the  hght  of  this 
investigation,  it  appears  might  be  profitably  pursued  in 
the  future  with  respect  to  the  conduct  of  municipal  elec- 
tric lighting  plants  in  the  State.  Two  significant  consid- 
erations present  themselves,  the  first  relating  more  directly 
to  the  returns  required  by  the  Board,  and  the  second  having 
to  do  largely  with  the  municipalities  themselves  and  with 
the  laws  relating  thereto. 

In  the  first  place,  the  returns  should  be  made  more  de- 
finite. The  Commissioners  should  prescribe  exactly  what 
information  is  to  be  given  in  such  a  way  that  misunder- 


IN  MASSACHUSETTS 

standings  will  be  reduced  to  a  minimum.  Too  frequently 
the  inaccuracies  which  have  constantly  annoyed  the  writer 
have  resulted  from  vagueness  in  the  requirements,  for 
which  the  reporting  plant  should  not  be  held  responsible. 
There  should  also  be  a  more  careful  separation  of  some 
of  the  items  in  the  returns,  particularly  in  the  case  of  out- 
lays for  labor  and  materials  which  appear  in  the  expense 
accounts.  The  companies  as  well  as  the  public  plants 
should  be  required  to  return  the  wages  which  they  pay, 
together  with  the  usual  hours  of  labor.  More  attention 
should  also  be  paid  to  an  analysis  of  some  of  the  simpler 
engineering  features  of  the  business,  and  the  generating 
plants  especially  should  be  required  to  make  more  provi- 
sion for  the  accuracy  of  their  records. 

A  really  uniform  policy  should  be  adopted  regarding 
the  capital  accounts  that  are  to  be  kept  by  the  municipal 
plants,  and  the  data  should  be  so  presented  that  valid 
comparisons  can  be  made  of  the  investment  in  the  two 
groups.  This  amount  should  be  published,  instead  of  the 
incomparable,  artificially  depreciated  "plant  accounts" 
as  at  present  given  in  the  Annual  Report.  New  construc- 
tion, from  whatever  source  the  funds  may  have  been  de- 
rived, should  be  treated  as  such  in  the  returns. 

All  plants,  both  public  and  private,  should  be  required 
to  work  out  the  more  important  relations  between  their 
individual  data,  physical  and  financial.  From  such  a 
policy  a  twofold  gain  would  result.  In  the  first  place, 
it  would  have  a  wholesome  effect  upon  the  plants  them- 
selves, as  their  attention  would  thus  be  directed  to  many 
vital  problems  which  are  now  overlooked;  and  in  the  sec- 
ond place,  based  on  the  information  thus  available,  the 
Board  might  well  incorporate  in  their  Annual  Report  a  few 
of  the  figures  which  would  make  it  possible  for  an  intelli- 
gent student  of  problems  such  as  these  to  find  out  the  more 
significant  relations  existing  between  the  two  classes  of 
plants,  without  being  compelled  to  wade  through  a  mass 


S66 


MUNICIPAL  ELECTRIC  LIGHTING 


of  undigested  and  uncorrelated  material  in  the  separate 
returns. 

While  all  praise  is  due  the  Board  for  the  effectiveness 
with  which  they  have  regulated  the  industry  under  dis- 
cussion, and  while  even  greater  credit  should  be  given 
them  when  we  know  how  "under-staffed"  they  have  at 
times  been  for  the  performance  of  so  important  a  work  as 
they  have  to  do,  yet  it  does  appear  that  their  system  of 
accounting  has  developed  in  a  somewhat  haphazard 
fashion  —  due  to  the  impossibility,  in  many  instances,  of 
securing  from  the  managers  of  municipal  plants  any  usable 
records  whatever.  In  the  returns,  perhaps  the  merely 
financial  aspects  of  the  problem  have  been  over-empha- 
sized, while  some  of  the  more  fundamental  elements  in  the 
case  have  been  lightly  stressed.  To  be  sure,  there  is  the 
danger  of  losing  sight  of  the  underlying  principles' as  a 
result  of  giving  too  much  attention  to  the  statistical  and 
accounting  features  of  public  regulation.  When,  however, 
such  studies  may  throw  light  on  these  larger  problems, 
the  effort  so  expended  is  not  in  vain. 

Finally,  and  far  more  important  from  an  economic 
point  of  view,  the  municipal  plants  should  be  required,  by 
law  if  necessary,  to  be  conducted  exactly  as  if  they  were 
commercial  enterprises.  In  no  other  way  can  the  public 
be  made  to  imderstand  clearly  what  they  are  gaining  or 
losing  as  a  result  of  municipal  ownership.  Only  by  sub- 
jecting these  pubhcly  owned  plants  to  the  same  tests  that 
are  applied  to  private  business  can  we  reach  any  definite 
conclusions  as  to  their  real  eflBciency. 

This  means  that  they  should  sell  street  lighting  service 
to  their  municipalities  at  what  appears  to  be  a  fair  price, 
and  that  they  should  in  turn  pay  taxes  at  the  usual  rate.* 

*  Every  manager  of  an  important  plant  has  agreed  with  the  writer 
that  it  would  be  conducive  to  the  best  interests  of  all  if  the  street  lighting 
were  put  on  a  strictly  commercial  basis.  Several  have  also  assented  to 
the  proposition  that  taxes  should  be  paid,  when  it  was  carefully  explained 
to  them. 


IN  MASSACHUSETTS 


367 


They  should  either  own  all  of  their  property,  or,  if  munic- 
ipal real  estate  be  utilized,  they  should  pay  an  equitable 
rental  therefor.  Further,  the  services  rendered  by  any 
public  official  should  be  estimated  and  charged  at  the 
true  value  of  that  service.  Probably  not  a  single  appro- 
priation should  be  made  from  the  tax  levy  for  any  purpose 
whatever  in  connection  with  a  municipalized  commercial 
enterprise,  after  it  has  become  **  seasoned.*'  Such  an  in- 
dustry should  be  given  every  opportunity  that  is  afforded 
to  private  business,  and  it  would,  in  addition,  have  the 
advantage  of  securing  its  capital  at  a  lower  than  usual 
rate  of  interest.  But  here  the  public  financial  responsibility 

should  end. 

If  publicly  owned  commercial  business  were  carried  on 
as  here  suggested,  the  writer  will  venture  to  predict  that, 
while  many  municipalities  would  be  dissuaded  from  plung- 
ing into  ills  that  they  know  not  of,  those  which  have  al- 
ready acquired  an  industry  or  which,  under  the  new  con- 
ditions, do  make  the  experiment,  will  be  encouraged  to 
bring  their  business  to  the  highest  degree  of  efficiency. 
Whatever  may  be  our  conclusions  regarding  the  desirabil- 
ity of  public  ownership  for  other  than  financial  reasons,  there 
seems  to  the  writer  to  be  no  disputing  the  fact  that  if  the 
attempt  is  made,  it  should  be  done  in  the  most  effective 
manner  possible.  Whether  under  private  ownership  or 
under  public  control,  there  probably  never  has  been  and 
never  mil  be  a  time  when  the  best  results  can  be  attained 
if  those  methods  which  make  for  efficiency,  those  stimuli 
to  individual  initiative  which  are  the  basis  of  industrial 
and  social  development,  are  cast  into  the  discard.  From 
an  economic  point  of  view,  the  more  nearly  public  busi- 
ness conforms  to  the  well-known  canons  of  the  best  private 
enterprise,  the  more  successful  it  is  bound  to  be. 

In  parting,  what  further  light  does  the  present  study 
throw  upon  the  broader  problems  of  public  ownership? 


II 


368 


MUNICIPAL  ELECTRIC  LIGHTING 


The  stress  of  the  present  war  is  greatly  hastening  a  tend- 
ency which  was  abeady  strongly  pronounced  in  the  elec- 
tric light  and  power  business  throughout  the  country,  i.e., 
the  shutting-down  of  small  and  wasteful  generating  plants, 
and  the  consequent  development  of  a  comparatively  few 
large  central  stations  —  hydro-electric  wherever  possible 
—  which  can  keep  pace  with  the  economic  growth  of  the 
industry,  and  thereby  conserve  for  other  uses  our  supplies 
of  fuel.  The  electrification  of  practically  all  means  of 
transportation  is  probably  not  far  distant;  the  use  of 
electric  current  will  eventually,  no  doubt,  displace  other 
methods  of  heating;  our  factories  will  depend  for  motive 
power  almost  solely  upon  central  station  generation.  We 
are  on  the  threshold  of  marvelous  possibilities  in  the  art. 

But  in  the  meantime  much  experimentation  will  be 
necessary,  great  risks  must  be  nm,  many  failures  will  en- 
sue. The  problem  is  fundamentally  too  vast  to  be  bounded 
by  the  confines  of  any  municipality,  with  its  petty  dema- 
goguery  and  the  jealousy  of  its  neighbors.  No  unit  smaller 
than  the  State  could  possibly  deal  with  the  situation. ^  But 
would  the  State  prove  equal  to  the  task?  We  fear  not,  so 
long  as  human  nature  remains  as  it  now  is.  Under  demo- 
cratic institutions,  the  larger  the  governmental  body,  the 
less  economic  and  the  more  poHtical  it  becomes,  and  the 
more  energy  is  wasted  in  accompUshing  little.  To  blaze 
the  trail  is  the  work  of  a  select  few,  not  of  the  people  en 
masse.  The  electrical  industry,  as  all  industries  which 
reach  their  perfection,  will  be  developed  by  personal  gen- 
ius and  individual  effort,  lu-ged  on  by  the  desire  to  serve, 
no  doubt,  but  more  potently  stimulated  by  the  prospect 
of  material  rewards. 

What  part  the  State  and  the  National  Government 

*  There  is  at  present  a  bill  before  Congress  to  provide  for  the  per- 
manent development  by  the  Federal  Government  of  the  hydro-electric 
resources  of  the  country.  Some  States  also  have  discussed  similar  meas- 
ures. 


IN  MASSACHUSETTS 

will  play  in  our  future  industrial  life,  cannot  well  be  fore- 
told. The  more  primitive  stages  of  civilization  were 
marked  by  minute  regulation  of  private  affairs.  The  indi- 
vidual was  submerged,  while  the  ruler,  or  his  representa- 
tives, was  the  chief  entrepreneur.  Such  an  extension  of 
state  activity  to  conmiercial  undertakings  does  not  ap- 
pear to  be  compatible  with  freedom  and  growth.  The  most 
autocratic  of  civilized  governments  has  until  recently  also 
been  the  most  active  in  industrial  enterprises.  Could 
it  be  otherwise?  The  present  world  struggle  is  forcing 
others  to  follow  suit.  Will  the  coming  of  peace  bring  with 
it  a  fuller  realization  of  the  dreams  of  the  socialist,  or 
will  the  former  conditions  be  restored?  Public  owner- 
ship of  some  producers*  goods  may  eventually  become 
more  general.  We  must  not,  however,  be  unmindful  of 
the  fact  that,  when  the  war  is  over,  people  will  again  be 
actuated  by  the  old  individual  motives;  most  of  the  exist- 
ing urgent  incentives  to  unselfish  group  action  will  cease. 
Business  now  carried  to  a  reasonable  degree  of  perfection 
by  the  public  powers,  will,  if  retained  in  public  hands,  be 
in  danger  of  rapid  stagnation.  Whatever  the  sequel  may 
be,  this  modest  study,  as  well  as  most  careful  and  un- 
biased investigations,  points  to  the  conclusion  that  as  a 
rule  only  the  simplest  and  the  "well-seasoned"  enterprises 
are  at  all  suitable  for  public  operation;  and  even  these  are 
in  grave  danger  of  becoming  less  efficient  than  they  would 
be  in  private  hands.  Though  jx>litical  expediency  or  social 
necessity  may  sometimes  momentarily  outweigh  all  eco- 
nomic considerations,  it  still  seems  inherent  in  the  nature 
of  things  that  private  industry  must  continue  to  show 
the  way. 


I 


BIBLIOGRAPHY 


m 


NOTE 


The  purpose  of  tliis  bibliograpliy  is  to  show  what  sort  of  material  ia 
available  for  a  study  of  this  kind,  and  to  indicate  some  of  the  sources  of 
information  which  the  author  has  found  it  either  necessary  or  desirable 
to  look  into.  Few  of  the  references  specifically  on  the  subject  of  public 
ownership  have  been  of  any  direct  benefit,  though  sometimes  very  use- 
ful suggestions  have  been  discovered  buried  in  a  mass  of  trash.  The 
sources  which  have  proved  most  helpful  have  been  clearly  mentioned  in 
the  text.  In  addition,  many  letters  and  private  documents  have  been  of 
some  value.  In  practically  all  respects,  however,  this  study  has  neces- 
sarily been  carried  on  along  wholly  independent  lines,  as  it  is  built  up 
out  of  the  raw  material. 

Frequently  the  publications  here  listed  have  been  referred  to  in  an 
abbreviated  form  in  the  text.  Whenever  such  reference  might  lead  to 
confusion,  the  abbreviation  is  given  after  the  entry.  Titles  are  usually 
listed  according  to  the  author's  name  or  according  to  political  subdivi- 
sions. 

For  the  convenience  of  the  reader  the  followmg  classification  has  been 

made:  — 

1.  Books  and  manuals; 

2.  Public  documents  and  bulletins  (national,  state,  and  municipal),  laws,  and 
official  reports; 

3.  Articles  in  periodicals;  transaetums  and  proceedings  of  technical 

Hes; 

4.  Monographs,  bulletins,  miscellaneous  reports,  addresses,  etc. 


CLASSIFIED  LIST  OF  REFERENCES 

I.  Books  and  Manuaib 

American  Handbook  for  Electrical  Engineers.  Edited  by  Harold  Pender. 

New  York.  John  WUey  &  Sons,  1914;  pp.  2043. 
Avebury,  Rt.  Hon.  Lord,  P.C.  (John  Lubbock). 
On  Municipal  and  National  Trading.      London,  MacmiUan  &  Co., 

1907;  pp.  178. 

Public  Utility  Rates.      New  York,  McGraw-Hill  Book  Co..  1917- 
pp.  xiv,  387. 
Barrows,  William  Edwards,  Jr. 

Electrical  Illuminating  Engineering.      New  York,  McGraw  Publish- 
ing Co.,  1908;  pp.  V.  216. 


874 


BIBLIOGRAPHY 


Bemis,  Edward  W.,  editor. 
Municipal  Monopolies.      New  York,  Thomas  Y.  Crowell  &  Co.,  1899; 
pp.  691.   ("Mun.  Monop.") 
Buckley,  William  Joy. 
Electric  Lighting  Plants:  Their  Cost  and  Operation.      Chicago,  1894; 
pp.  275,  32  ill.,  20  pi. 
Central  Stations,  List  of,  in  United  States,  Canada,  and  Mexcio.      New 
York.  McGraw-HiU  Book  Co.,  1916.      ("  McGraw  Electrical  Direc- 
tory"; published  semi-annually.) 
Cleveland,  Frederick  A. 
Municipal  Administration  and  Accounting.      New  York,  Longmans, 
Green  &  Co.,  1909;  pp.  xvi,  361. 
Cole,  William  Morse. 
Accounts:  Their  Construction  and  Interpretation.      Boston*  Hough- 
ton Mifflin  Co.,  1908;  pp.  345. 
Cashing,  H.  C,  and  Harrison,  Newton. 
Central  Station  Management.      New  York,  D.  Van  Nostrand  Co., 
1916;  pp.  397. 
Darwin,  Leonard. 
Municipal  Ownership.    (Four  lectures  delivered  at  Harvard  Univer- 
sity.)     New  York,  E.  P.  Dutton  &  Co.,  1907;  pp.  149. 
Darwin,  Leonard. 
Municipal  Trade:  The  Advantages  and  Disadvantages.      New  York, 
E.  P.  Dutton  &  Co.,  1903;  pp.  464. 
Davies,  Emil. 
The  Collectivist  State  in  the  Making.      London,  G.  Bell  &  Sons,  1914; 
pp.  267. 
Dawson,  William  H. 

Municipal  Life  and  Government  in  Grermany.      New  Y<H>k,  Long- 
mans, Green  &  Co.,  1914;  pp.507.  (Cf.ch.  IX, pp. 209-259,*' Trad- 
ing Enterprises.") 
Edwards,  H.  M. 
Electric  light  Accounts  and  Their  Significance.      New  York,  McGraw- 
HiU  Book  Co.,  1914;  pp.  172. 
Electrical  Meterman's  Handbook.      3d  ed.  National  Electric  Light 

Association.      New  York,  1912;  pp.  1076. 
FairUe,  John  A. 

Essays  in  Municipal  Administration.      New  Y<M>k,  1906;  pp.  874. 
Floy,  Henry. 
The  Colorado  Springs  lighting  Controversy.      New  York,  The  Il- 
luminating Engineering  Publishing  Co.,  1908;  pp.  327. 
Foster,  Horatio  A. 

Engineering  Valuation  of  Public  Utilities  and  Factories.      New  York, 
D.  Van  Nostrand  Co.,  1912;  pp.  345. 
Francisco,  M.  J. 
Municipal  Ownership  vs.  Private  Corporations.      5th  (?)  ed.      Rut- 
land, Vt.,  M.  J.  Francisco  &  Son,  1898;  pp.  150.      (Statistics  to 
date.) 


BIBLIOGRAPHY 


S75 


Garcke,  Emile. 
Manual  of  Electrical  Undertakings.      London,  1896  to  date.      (Pub- 
lished annually.) 
Gear,  Harry  Barnes,  and  Williams,  Paul  Francis. 
Electrical  Central  Station  Dbtribution  Systems.      2d  ed.  New  York, 
D.  Van  Nostrand  Co.,  1916;  pp.457. 

Gessell,  Gerhard  A. 
Minnesota  Public  Utility  Rates.  Current  Problems,  No.  3.      Bulle- 
tm  of  the  University  of   Minnesota.       Minneapolis,   1914;  pp. 

254. 
Grunsky,  Cari  Ewald,  and  Grunsky,  Carl  Ewald,  Jr. 
Valuation.  Depreciation,  and  Uie  Rate-Baae.      New  York,  John  Wiley 
&  Sons,  1917;  pp.  387. 

Guyot,  Yves.  «  «  «  . 

Where  and  Why  Public  Ownership  Has  Failed.  Tr.  by  H.  F.  Baker. 
New  York,  Macmillan  Co.,  1914;  pp.  459. 

Hayes,  Hammond  V.  ..-..,       v    i. 

Public  Utilities:  Their  Cost  New  and  Depreciation.      New  YorlK. 
D.  Van  Nostrand  Co.,  1913;  pp.  262. 

Hayes,  Hammond  V.  .  .  «  i.t      i7.-a. 

Public  Utilities:  Their  Fair  Present  Value  and  Retom.      New  Yortc, 
D.  Van  Nostrand  Co.,  1915;  pp.  207. 

Holmes,  F.  L.  .,...«»..         xt 

Regulation  of  Railroads  and  Public  Utilities  m  Wisoonnil.      New 

York,  D.  Appleton  &  Co.,  1915;  pp.  875. 

Howe,  F.  C.  ^^        ._- 

The  British  City.      New  York.  Scribner's.  1907;  pp.  870.      (a. 

ch.  DC,  especially.) 
Jansky,  Cyril  M. 
Electrical  Meters.      New  York,  McGraw-Hill  Book  Co..  1918;  pp. 

370. 
Jevons,  W.  Stanley. 
The  State  in  Relation  to  Labor.      London.  Macmillan  &  Co..  1884; 

pp.  XXIX.  171. 
Johnson.  Geotgo. 
Electric    Lighting    Accounts.      (Accountants'    Library.    voL    29.) 
London.  Gee  &  Co.,  1904;  pp.  xv.  128. 
King,  Clyde  Lyndon,  editor. 
The  Regulation  of  Municipal  Utilities.      New  York  and  London, 
D.  Appleton  Co.,  1912;  pp.  ix,  404.      (National  Municipal  League 

Series.) 
Knoop,  Douglas. 
Principles  and  Methods  of  Munidpal  Trading.      London,  Macminan 
&  Co..  1912;  pp.  xvii,  409. 
Knox,  Charles  E.,  and  Shaad,  George  E. 
Electric  Wirmg  and  Lighting.    Chicago,  American  Technical  Society, 
1915;  pp.  87,  94,  vi. 
Kommunales  Jahrbuch.      Jena,  G.  Fischer,  1908  to  date. 


876 


BIBLIOGRAPHY 


BIBLIOGRAPHY 


377 


i 


Marks.  WUIiam  D. 

The  Finances  of  Gas  and  Electric  Light  and  Power  Industries.      New 
York,  1907;  pp.  540  and  27. 
Marks,  William  Dennis. 
Practiail  Rate  Making  and  Appraisement.      New  York,  Lyons  Print- 
ing Co.,  1914;  pp.  269.  diagrams. 
Matthews,  Nathan. 

Municipal  Charters.      Cambridge.  Harvard  Univenuty  Press   1914- 
pp.  210.  '  * 

Meyer,  H.  R. 

^yj^P^  ^^"^^P  T  ^^^  Britain.    New  York.  MacmiUan  Co.. 
1906;  pp.340.       (Cf.  chs.  xn-xvni.) 

Moody's  Analyses  of  Investments.  Part  H.  PubUc  Utilities  and  In- 

dustnab.    (Published  annually.) 
Morgan,  Joy  E.,  and  Bullock.  Edna  D. 
Selected  Articles  on  Municipal  Ownership.      Minneapolia.  The  H  W 

Wilson  Co..  1911;  pp.  219. 
Municipal  Accounting.    Handbook  of  New  York  Bureau  of  Municipal 

Research       New  York,  D.  Appleton  &  Co..  1913;  pp.  318. 
Municipal  Monopolies.  Edited  by  Bemis.      New  York.  Thomas  Y 

Crowell  &  Co..  1899;  pp.  691.     ("Mun.  Monop.") 
Municipal  Year  Book.      London,  Municipal  Journal.    1897  to  date. 

(Cf.  vol.  xvin,   1914.  pp.  673-729;  lists  of  accounts,  pp.  1087- 

Munro.  William  Bennett. 
Principles  and  Methods  of  Municipal  Administration.      New  York. 
Macmillan  Co    1916;  pp.  491.      (Cf.  ch.  x.  "Munidpal  Finance.'*) 
National  Civic  Federation. 
Commission  Regulation  of  Public  Utilities.      New  York.  1913-  nn 
1284       (Analyses  of  Public  Utility  Laws  of  43  States,  and  of  Fed- 
era]  iiovemment.) 
National  Civic  Federation. 

Report.   Municipal  and  Private  Operation  of  Public  Utilities       3vQla- 
New  York.  1907;  pp.  489.  1230,  768. 
National  Electric  Light  Association. 
Standai^  Classification  of  Accounts.      New  York.  The  James  Kemo- 
ster  Prmting  Co..  1914;  pp.  115. 
Parsons.  Frank. 

The  City  for  the  People.      Philadelphia,  C.  W.  Taylor.  1901  •  dd  704 
Poor  s  Manual  of  Public  UtiUties.      New  York.  1918.  to  date    (Pub^ 

lished  annually.)  ^ 

Porter,  Robert  P. 

^'9(^^T'ji  ^"^f"^^  Ownership.      New  York.  Century  Co.. 

1907;  pp.356.      (Cf .  parUcularly  ch.  xm.) 
Public  Utility  Economics. 
A.So^es  of  Ten  Lectures  Delivered  before  the  West  Side  Young  Men's 

Christmn  Association.      New  York,  The   Finance  Forum,  1914; 

pp.  195. 


Pond,  Oscar  Lewis. 
Municipal  Control  of    Public  Utilities.      Ph.D.  Thesis,  Columbia 
University.  1906;  pp.  117. 
Raymond,  William  L. 
American   and    Foreign   Investment    Bonds.       Boston,    Houghton 
Mifflin  Co..  1916;  pp.  324.       (Cf.  ch.  vi.) 
Saliers.  Earl  A. 
Principles  of  Depreciation.      New  York,  The  Ronald  Press,  1915; 
pp.  200. 
Seabrook,  A.  Hugh. 
The  Management  of  Public  Electricity  Supply  Undertakings.      New 
York,  McGraw-Hill  Book  Co.,  1913;  pp.  192,  xx. 
Shaw,  Bernard. 
The  Common  Sense  of  Municipal  Trading.      London.  A.  C.  Flfield. 
1908;  pp.  120.      (Fabian  Socialist  Series.  No.  5.) 
Whinery,  S. 
Municipal  Public  Works.      New  York.  Macmillan  Co.,  1903;  pp. 
211.      (Cf.  chs.  xra-xrv.) 
Whitten.  R.  H. 
Valuation  of  Public  Service  Corporations.      New  York.  Banks  Law 
Publishing  Co..   1912;  pp.  798.      (Cf.  ch.  xxxn,  pp.    721-745. 
"Bibliography  of  Valuation  and  Depreciation.") 

Supplement  to  above.      New  York.  1914;  pp.  799-1448. 

Wilcox,  Delos  F. 
The  American  City:  a  Problem  in  Democracy.      New  York,  Macmil- 
lan Co..  1904;  pp.  423.    The  Citizen's  Library.    ("The  Control  of 
PubHc  UtUities."  pp.  52-90.) 
Wilcox,  Delos  P. 
Municipal  Franchises.      Vol.  i,  pp.  710.      Rochester,  N.Y.,  The  Gcr- 
vaise  Press.  1910.      Vol.  n.  pp.  885.      New  York.  The  Engmeering 
News.  1911. 
Williams,  Arthur,  and  Tweedy,  Edmund  F. 
Commercial  Engineering  for  Central  Stations.      New  York.  McGraw- 
Hill  Book  Co.,  1912;  pp.  142. 
Wyer.  Samuel  S. 
Regulation.  Valuation,  and  Depredation  of  Public  Utilities.      Colum- 
bus. Sears  &  Simpson  Co.,  1913;  pp.  313. 
Zueblin.  Charles. 
American  Municipal  Progress.      (Rev.  Ed.)  New  York.  Macmillan 
Co..  1916;  pp.  522. 

11.  Public  Documents  and  Bitlletins  (National,  State, 
AND  Municipal),  Laws,  and  Official  Refobts 

Adams,  Alton  D. 
Municipal  Electric  Plants  in  Massachusetts.  Testimony  before  the 
United  States  Industrial  Conmiission.      Washington.  1901.      Re- 
ports, vol.  IX,  pp.  275-285. 


|ii. 


878 


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BIBLIOGRAPHY 


379 


«■» 


Till 


I: 


Cleveland. 
The  Cleveland  Municipal  Lightmg  Plant.      Bulletin  No.  1.  April, 

1915;  pp.  26.      Bulletin  No.  2,  September,  1915;  pp.  96. 
Lifi^t  Plant  Audit  for  1915,  in  the  City  Record.  March  7,  1917;   pp. 
8-28  (253-278). 
Omnecticut.  Bureau  of  Labor  Statistics. 
15th  Annual  Report,  1899.      Hartford,  1899;  pp.  15-88.      (Private 
and  Municipal  Ownership.    1.  Electric  Light  and  Power  Plants. 
2.  Gas  Works.  3.  Water  Works.) 
Holyoke  Water  Power  Company  v.  City  of  Holyoke,  vol.  xvi. 

Brief  for  the  Respondent;  by  Nathan  Matthews,  Jr.,  Addison  L.  Green, 
of  Counsel;  Nathan  P.  Avery  (City  Solidtor).  Submitted  I>ec.  26^ 
1901.      Boston,  1902;  pp.  526. 
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Insull,  Samuel. 
Some  Advantages  of  Monopoly  in  Connection  with  the  Manufacture 
and  Distribution  of  Electric  Energy;   pp.  61.      (Before  the  Engi- 
neers* Club  of  Dayton,  Ohio,  October  6,  1914.) 
Insull,  Samuel. 
The  Progress  of  Economic  Power  Generation  and  Distribution.      Chi- 
cago, 1916;  pp.  55. 
Iowa. 
Electric  Central  Station  Operation  in  Iowa.   By  F.  A.  Fish  and  H.  W. 
Wagner.      Iowa  State  College  of  Agriculture  and  Mechanic  Arts, 
Bulletin  38.    Engineering  Experiment  Station.      Ames,  la.,  1915; 
pp.  16i. 
Los  Angeles. 
Report  on  Government  Ownership  of  Public  Utility  Service  Under- 
takings; by  Committee  on  Municipal  Ownership  of  the  City  Club 
of  Los  Angeles,  1917;  pp.  38. 
Marston,  Glen. 
Facts  on  Municipal  Ownership  in  268  Towns  and  Cities.      Chicago, 
Public  Service  Publishing  Co.,  1915;   pp.  32. 
Matthews,  Nathan,  Jr. 
Municipal  Lighting  Argument  for  the  Town  of  Broddine,  March  12, 
1896;  pp.  46.    (Revised  and  condensed.) 
Matthews,  Nathan,  Jr. 
Report  to  the  Selectmen  of  Brookline  on  a  Municipal  Arc  Light  Plant, 
July  15,  1896;   pp.  30.   ("Matthews:  Rept.  Brook.") 
Matthews,  Nathan,  Jr. 
Report  on  Comparative  Cost  of  Public  Lighting  in  Boston  and  Other 


Principal  Cities  of  the  Country.      Boston,  Municipal    Printing 
Office,  1898;  pp.  56.    ("Matthews:  Rept.  Comp.") 
Milwaukee. 
Milwaukee  Street  Lighting  Reports.    Citizens'  Bureau  of  Municipal 
Efficiency,  1916;  pp.  136. 
Nash,  L.  R. 
Some  Commercial  Considerations  in  Central  Station  Rate  Making: 
An  Address,  Harvard  University,  1915;  pp.  14. 
Newcomb,  H.  T. 

Public  Ownership  and  the  Wage-Earner.      Washington,  D.C.   Press 
of  George  E.  Howard,  1906;  pp.  25, 
Ohio. 

Complete  Reports  on  Municipally  Owned  Plants  in  the  State  of  Ohio. 
Chicago,  Public  Service  Publishing  Co.,  1915.   (Eleven  pamphlets, 
June,  1914,  to  April,  1915.) 
Plattner,  William. 
Report  to  the  Committee  on  the  Investigation  of  the  Milford  Electric 
Light  and  Power  Co.      North  Attleborough,  1915;  pp.  62. 
Plattner,  William. 
Report  to  the  Board  of  Selectmen,  etc.,  on  the  Investigation  of  the 
Spencer  Gas  Co.      North  Attleborough,  1914;  pp.  43. 
South  Hadley. 
Report  of  Special  Committee  Appointed  June  2,  1913,  to  Investigate 
the  Matter  of  Municipal  Lighting  for  the  Town  of  South  Hadley, 
Mass.  (Including  Report  made  to  said  Committee  by  William  Platt- 
ner, Consulting  Engineer.)  Holyoke,  M.  J.  Doyle  Co.,  1913;  pp.  40. 
Stone  &  Webster. 
Operation  of  Municipal  Electric  Lighting  Plants  in  Massachusetts  and 
in  Lewiston  and  Bangor,  Maine. 
Sullivan.  J.  W. 
Municipal  and  Private  Operation  of  Public  Utilities.      New  York, 
123  Bible  House,  1908;  pp.  128.   (Sullivan  v.  Commons.) 
Syracuse  Lighting  Committee. 
Cost  of  Residential  Light  and  of  Commercial  Light  and  Power  for 
Twenty-two  Plants.     Syracuse,  1907;  pp.  44.      (Cf.  pp.  24-38.) 
Thompson,  Carl  D. 
Municipal  Electric  Light  and  Power  Plants  in  the  United  States  and 
Canada.  Bulletin  No.  1  of  the  Public  Ownership  League  of  America. 
Chicago,  1917;  pp.149. 
Wellesley. 
Report  of  Committee  on  Municipal  Lighting  Plant  for  Town  of 
Wellesley.  1900;  pp.  52. 
Whiting,  C.  W.,  M.  E. 

Report  of  the  Investigation  of  the  Municipal  Light  Plant  of  the  Town 
of  Reading.    Boston  C-)-    1917;   PP-  29. 
Wisconsin. 
Legislative  Reference  Bulletins  on  Municipal  Electric  Lighting  and 
on  Municipal  Gas  Lighting    By  E.  S.  Bradford. 


*i4 


« 


f 


B 


STATISTICAL  APPENDIX 


NOTE 

The  following  statistical  tables  cover  for  the  different  plants  the  more 
important  data  which  have  been  summarized  in  the  text.  They  have  been 
arranged  with  a  view  to  presenting  in  a  readily  comparable  form  those 
relations  which  are  ordmarily  of  most  significance  in  a  study  of  this  kind. 
For  the  reader's  convenience  the  order  of  the  preceding  chapters  has 
usuaUy  been  followed.  The  composite  plants  (gas  and  electric)  have  in 
practically  all  cases  been  kept  separate  from  the  other  generating  plants, 
so  that  individual  differences  can  thus  be  more  readily  studied.  Because 
of  the  relatively  large  size  of  Holyoke  in  the  one  group  of  municipal 
plants,  and  of  Norwood  in  the  other,  it  has  been  necessary  to  give  the 
totals  and  averages  both  with  and  without  these  plants. 

The  fully  weighted  arithmetical  or  "group"  average  is  used  in  all 
cases.  Accordingly,  the  unit  cost  and  unit  income  are  found  by  dividing 
the  total  cost  or  income  of  a  particular  sort,  for  the  group  of  plants,  by 
the  total  number  of  kilowatt  hours  generated  or  sold  as  the  case  may  be. 
Other  averages  are  found  m  a  similar  manner.  For  purposes  of  compan- 
son  the  current  supplied  by  the  public  plants  for  street  lighting  is  in- 
cluded with  the  current  "sold,"  even  though  it  is  not  actually  paid  for  in 
the  commercial  sense.  When,  however,  there  might  be  any  possibility 
of  doubt  as  to  the  exact  meaning,  the  term  "delivered"  or  "supplied" 
is  used  in  place  of  "sold."  Furthermore,  if  plants  fail  to  report  items 
which  it  is  clearly  known  should  be  reported,  e.g.,  the  connected  had,  the 
averages  are  naturally  computed  for  the  remaining  plants  only.  Also, 
when  the  returns  for  1910  were  found  to  be  incomplete  m  certain  pomts, 
the  data  have  in  a  few  cases  been  taken  for  the  following  year.  These 
and  other  irregularities  are  duly  mentioned  in  the  footnotes  to  the  van- 

ous  tables.  ,.        ,        ,      i.  •       it. 

Finally,  due  to  the  difficult  and  complicated  task  of  copymg  the 
basic  figures  from  the  returns  and  putting  them  through  countless  oper- 
ations in  order  to  present  them  in  their  present  form,  it  is  inevitable  that 
minor  errors  should  have  crept  into  the  work.  The  process  of  printing 
has  added  to  the  possibUity  of  mistakes.  Great  care,  however,  has  been 
exercised  at  all  stages,  and  every  attempt  has  been  made  to  verify  the 
resulU  by  different  methods,  so  that  any  discrepancies  which  remam 
will  certainly  be  insignificant.  For  these,  if  such  there  be,  the  author 
craves  the  indulgence  of  those  readers  who  are  sufficiently  interested  to 
look  carefully  into  this  Appendix. 

Note.  The  footmgs  of  the  various  dollar  columns  will  not  always 
coincide  with  the  sum  found  by  adding  the  separate  items,  due  to  the 
fact  that  the  latter  are  computed  to  the  nearest  dollar,  while  the  former 
include  the  cents  as  well. 


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INDEX 


Abandoned  municipal  plants,  13, 
16.  32.  .^  ^   ^ 

Accounts,  uniform,  ^  prescnbed  by 
Commissioners  in  Massachu- 
setts, 37,  38,  46,  47;  suggestions 
regarding,  364--366. 

Adams,  Alton  D.,  on  municipal 
electric  lighting  in  Massachu- 
setts, 20-28,  30,  71. 

Advertising  for  new  business,  340. 

Allegheny,  municipal  electric  plant, 
29. 

Alternating  current,  91-92  (foot- 
note). 

Amesbury,  101,  116,  164. 

Annals  of  the  American  Academy  of 
Political  and  Social  Science,  arti- 
cles on  public  ovraership  in,  31. 

Appliances,  sale  of,  311,  350. 

Appropriations  from  the  tax  levy 
for  municipal  plants,  177,  237- 
238;  purchasing  plants,  242,  246; 
see  also  Appendix,  426  and  466. 

Arc  lamps,  use  of,  ifor  street  light- 
ing, 125. 

Ashbumham,  70  (footnote). 

Assessed  value  of  generating 
plants,  154. 

Attleborough,  146. 

Auditing,  in  municipal  plants,  321, 
351. 

Auditor's  fees,  municipal  plants, 
192. 

Avebury,  Lord,  opposes  public 
ownership,  35. 

Bad  debts,  193. 

Balance  sheets,  175-177;  purchas- 
ing plants,  245-246. 

Barker,  Forrest  E.,  224  (footnoU). 

Belmont,  70  (footnote),  146. 

Bemis,  Edward  W.,  20;  studies  in 
municipal  ownership  criticized, 
22—23  29. 

Beverly.'  133,  161,  166. 

Binghampton  (N.Y.),  32. 

Blackstone,  84. 

Boilera,  capacity  of,  89-90,  93; 
boiler-rooms,  300. 

Bond  issues,  regulated,  41,  49,  52; 
interest  on,  212-213.  . 

Boston,  municipal  ownership  m, 
discussed,  18,  19,  146. 

Bowker,  R.  R.,  24  (footnote). 


Bozell,  Harold  V.,  33. 

Braintree,  59. 

Buckley,  W.  J.,  book  on  "  Electric 
Lighting  Plants  "  discussed,  14. 

Burdett,  Everett  W.,  opposes  pub- 
lic ownership  in  England,  34. 

Buzzard's  Bay,  99, 133, 165,  passim, 

Cambridge,  146. 

Canada,  municipal  electric  plants 
in,  33. 

Candle  power  of  street  lamps,  126. 

Capitalization,  control  of,  by  Board 
of  Gas  and  Electric  Light  Com- 
missioners in  Massachusetts,  49, 
52,  224. 

Census  Bureau,  Federal,  referred 
to,  5;  census  of  1890  (electric 
li^t  plants  in  New  York  State), 
13-14, 

Census  of  Electric  Light  and  Power 
Stations  in  the  United  States, 
1902,  reviewed,  28-29;  referred 
to,  33  (footnote),  69;  for  1917, 
referred  to,  2,  284. 

Central  electric  stations,  compara- 
tive data  for  the  United  States, 
9-13;  in  Massachusetts,  55-68; 
local  conditions  in,  300-305; 
passim.  See  also  "Generating 
stations." 

Chicago,  municipal  ownership  in, 
17-18,  19,  29;  street  lighting 
plant,  56  (footnote). 

Chicopee,  69  (footnote),  71,  74, 100. 

Christie,  A.  G.,  33. 

Civil  service  regulations,  some 
employees  of  municipal  plants 
under,  334. 

Clark,  Evans,  quoted,  33  (foot- 
note). 

Clark,  Walton,  quoted,  30. 

Cleveland,  municipal  plant  in,  11 
( footnote) ,  Z\. 

Cofd,  pounds  used  per  kilowatt 
hour  generated,  95-96;  cost  of, 
185-186. 

Commercial  lamps  per  customer, 
114. 

Commissioner  of  Labor  (U.S.), 
Fourteenth  Annual  Report  (on 
public  ownership  of  water,  gas 
and  electric  li^t  plants),  re- 
viewed, 24-26. 


'I 


480 


INDEX 


Commissions,  with  power  to  regu- 
late municipal  electric  light 
plants,  41  {footnote). 

Commons,  John  R.,  referred  to, 
16  (footnote),  18,  19;  writing  on 
municipal  ownership  criticized, 
20-22. 

Companies,  lighting,  organisation 
of,  in  Massachusetts,  47-48;  con- 
trol of  stock  issues  by  Commis- 
sioners, 49. 

Competition,  prohibited  by  law  in 
Massachusetts,  48-49,  51. 

Complaints,  handling  of,  311. 

Composite  plants,  62. 

Conoerning  Municipal  Ovmerahip, 
journal  opposed  to  public  owner- 
ship, 32. 

Concord,  71  (footnote),  134. 

Connected  load,  total,  113,  116- 
117;  commercial  lighting,  114- 
115;  power,  115-116;  relative 
distribution    of,    118-119;    kilo- 

,  watt  hours  consumed  per  kilo- 
watt connected  load,  122-123; 
other  analyses,  120-124;  in  pur- 
chasing plants,   137-138. 

Consolidation  of  lighting  plants  in 
the  United  States,  10-11;  legal 
provisions  relating  to,  in  Massa- 
chusetts, 48;  increasing  tendency 
toward,  62. 

Construction,  new  (1914-1915), 
174-175;  in  purchasing  plants, 
245. 

"  Control "  in  the  lighting  business, 
163-164;  of  purchasing  plants, 
244-245;  possible  advantages  of 
central  control,  364. 

Corruption  in  municipal  manage- 
ment, 330-332. 

Costs,  per  kilowatt  hour.  See 
"Unit  costs"  and  "Street 
lighting." 

Current  lost  and  unaccounted  for, 
100-104,  308-309;  in  purchasing 
plants,  135. 

Customers,  deposits  may  be  re- 
quired of,  46;  compulsory  serv- 
ice to,  46;  relative  number  of, 
108-110;  current  used  by,  111- 
112;  in  purchasing  plants,  136- 
137;  complaints,  311. 

Danvers,  first  case  of  municipal 
ownership  in  Massachusetts,  37- 
38,  59;  passim. 

Darwin,  Leonard,  Major,  opposes 
municipal  ownership,  35. 

Davies,  Emil,  favors  public  owner- 
ship, 35. 

Dead  assets,  method  of  handling, 
167,  166;  in  purchasing  plants, 


244;  amount  of,  in  generating 
plants,  321 ;  in  purchasing  plants, 
352. 

Debt,  provisions  regarding  the  in- 
curring of,  by  municipal  plants, 
41,  43;  outstanding,  177;  annual 
payments  of,  214;  of  municipali- 
ties under  public  and  under  pri- 
vate ownership  contrasted,  276, 
279. 

Decreasing  costs,  law  of,  as  applied 
to  electric  light  plants,  194. 

Deficit  of  municipal  plants,  176^ 
176,  229. 

Deposits  required  from  customers, 
46,  311. 

Depreciation,  yearly  rate  esti- 
mated, Buckley,  14,  Foster,  15; 
Parsons'  views  on,  18;  Commons 
against  a  depreciation  fund,  22; 
included  in  the  cost  of  service 
for  municipal  plants,  24;  pro- 
vided for  by  law  in  Massachu- 
setts (rate  now  3  per  cent),  42- 
44;  companies  not  required  to 
write  off,  44;  method  of  hand- 
ling, 156-157,  175  (footnote); 
unit  cost  of,  213-214;  compara- 
tive rate  of  (1910-1915),  215- 
223;  funds  carried  as  assets  by 
municipal  plants  and  as  liabili- 
ties by  the  companies,  216;  atti- 
tude of  National  Electric  Light 
Association  on,  218;  in  purchas- 
ing plants,  250. 

Detroit,  municipal  street  lighting 
plant,  19,  20,  29,  31,  56. 

Differential  rates  approved  by 
Commission,  45,  53-54. 

Direct  current,  92  (footnote). 

Distribution  costs,   188-191. 

Diversity  factor,  94;  defined,  98, 117. 

Dividends,  54,  58;  rate  of,  214;  in 
purchasing  plants,  251. 

Dunkirk,  municipal  light  plant, 
14,  20. 

Dynamos,  91-93 ;  per  oapita  rating, 
94. 

EJdgar,  Charles  L.,  quoted,  30. 

Edison  Electric  Illuminating  Com- 
pany of  Boston,  62-63  (fool- 
note),  59. 

Efficiency  of  distribution  factor,  102. 

Eight-hour  day,  adoption  of,  265- 
266;  enforcement  of,  335. 

Electricity  charged  to  municipali- 
ties at  cost,  45. 

Employees,  average  number,  257- 
260;  wages  and  salaries,  262-264; 
local  conditions,  334-339;  af- 
fected by  civil  service,  when, 
334;   foreigners,   336;   qualifica* 


INDEX 


481 


tions,  335;  hours  of  labor,  335; 
compensation,  335-336;  length 
of  service,  336;  reasons  for  dis- 
charge, 336;  sick  leave,  holidays, 
etc.,  337-338;  unionization  of, 
338;  in  purchasing  plants,  354. 
See  also  "Labor,"  and  "Wages." 

Expenses,  annual,  defined,  42-43; 
comparative  (in  Massachusetts), 
61.  See  also  "Unit  costs." 

Extension  of  service,  policy  regard- 
ing, 309-310,  341;  in  purchasing 
plants,  348. 

••Fair  return,"  53-54. 

Fall  River  case,  49. 

Financial  results  of  operation, 
sundry  comparisons,  generat- 
ing plants,  225-229;  purchasing 
plants,  250-251. 

Foote,  Allen  R.,  13. 

Foster,  Horatio  A.,  survey  of  light- 
ing plants  reviewed,  14-16;  re- 
ferred to,  20. 

Francisco,  M.  J.,  book  opposing 
municipal  ownership  criticized, 
16;  referred  to,  20. 

Free  service,  received  by  municipal 
plants,  24,  316-317;  rendered  by, 
315,  317. 

Fuel,  proportionate  cost  of,  14; 
comparative  statistics  on,  95-96 ; 
cost  per  kilowatt  hour  generated, 
184-186. 

General  office  expenses,  192. 

Generating  stations,  equipment, 
89-94,  300-305;  economizers, 
300;  "housekeeping,"  302;  venti- 
lation, 302-303;  location,  303; 
reasons  for  stopping  the  genera- 
tion of  current,  303-304;  objec- 
tions to  the  present  condition, 
342;  public  opinion  on  the  ques- 
tion of  ownership,  342-345. 

Geneseo  (111.),  32. 

Geneva  (N.Y.),  private  plant,  29. 

Germany,  municipal  electric  light- 
ing in,  35  (footnote). 

Gloucester,  133,  161,  190,  191,  193, 
204. 

Great  Barrington,  101,  165  (foot- 
note), 166. 

Great  Britain,  public  ownership  in, 
34-35. 

Groveland,  70  (footnote). 

Harvard    (Mass.),    244    (footnote), 

251  (footnote). 
Hingham,  70  (footnote).  , 

Holding    companies    abolished    m 

Massachusetts  in  1913,  224. 
Holidays  for  municipal  employees, 


laws  regarding,  265-266;  when 
allowed,  337-338. 

Holyoke,  44,  60,  61,  67,  69  (foot- 
note), 133,  151,  172,  179,  194- 
196;  sells  current  for  street  light- 
ing, 207  (footnote);  280. 

Holyoke  Water  Power  Company, 
271  (footnote). 

Horizontal  combination  in  the  elec- 
trical industry,  48,  62. 

Hours'  use  of  maximum  capacity 
of  generators,  98-99. 

"Housekeeping"  of  plants,  302. 

Howe,  Frederic  C,  35. 

Hudson,  69  (footnote). 

Hull,  63  (footnote),  69,  74.  206. 

Hydro-electric  plants,  in  Massa- 
chusetts, 48,  49  (footnote),  57, 
59;  future  of,  368. 

Illinois,  municipal  plants  in,  56 
(footnote). 

Income,  per  kilowatt  hour  sold, 
196-205;  operating,  206;  net. 
206;  percentage  analysis,  207; 
per  dollar  of  investment,  208;  per 
customer,  208;  per  capita,  208; 
per  kilowatt  connected  load,  208; 
per  kilowatt  capacity  of  dyna- 
mos, 209.     See  also  "Rates." 

Indiana,  municipal  plants  in,  66 
(footnote). 

Insurance,  policy  of  municipal 
plants  regarding,  21;  computed 
to  find  costs,  24;  comparative 
rates,  Appendix,  436-437;  for 
purchasing  plants,  246,  Appen- 
dix, 470-471. 

Integration  in  the  electrical  indus- 
try, 48,  62. 

Interest,  in  municipal  plants,  15; 
on  total  investment  of  public 
plants,  21,  24,  27;  bonds  of  muni- 
cipal plants  in  Massachusetts 
not  to  carry  more  than  5  per  cent, 
41  (footnote);  amount  and  rate 
of,  212-213;  reasons  for  comput- 
ing on  total  investment  in  order 
to  find  real  cost,  237-238. 

Investment,  comparative,  15;  total 
(municipal  plants),  158;  compari- 
sons of,  159-165;  per  kilowatt 
capacity  of  dynamos,  165-167;  in 
station  and  real  estate,  168;  in 
distributing  system,  169-171;  in 
municipal  plants  purchased  from 
private  owners,  171-172;  other 
analyses,  173-174;  per  dollar  of 
operating  income,  208;  in  real  es- 
tate, 219;  for  purchasing  plants, 
242-245. 
Iowa,  electric  central  station,  opera- 
tion in,  bulletin  on,  33. 


h« 


482 


INDEX 


INDEX 


483 


Ipswich,  71  (footnote),  99. 
Isolated  electric  stations,  10  (foot- 
note). 

Kilovolt-ampere  rating,  91  (foot- 
note). 

Knoop,  Douglas,  book  on  municipal 
ownership  referred  to,  35. 

Labor,  proportionate  cost  of,  14 ; 
comparative  cost,  15;  and  politics 
in  Chicago,  17-18;  unit  cost  at 
station,  186-187;  distribution, 
188-190;  average  number  of  em- 
ployees, 257-260;  comparative 
eflBciency  of,  260-261;  legislation 
adopted,  265-266.  See  "Em- 
ployees." 

Lamps,  commercial,  114-115; 
street,  124-128;  renewals,  205, 
and  Appendix,  416-417. 

Land,  area  of,  in  districts  served,  143. 

Lee,  193,  204. 

Leominster,  146. 

Lines,  commercial,  129;  street,  130; 
per  mile  of  streets,  130;  per  cus- 
tomer, 131;  underground,  132; 
in  purchasing  plants,  139;  cost 

'.  of,  161,  244;  local  conditions, 
305-308;  in  purchasing  plants, 
349-350.  See  also  "Poles," 
"Transformers,"  and  "Meters." 

Load  factor,  importance  of,  82,  84; 
defined,  97,  98. 

"Loss  in  operation,"  defined,  43. 

Ludlow,  244  (footnoU),  251  (foot- 
note). 

Lunenburg.  70  (footnote),  146,  245 
(footnote). 

Maltbie,  Milo  R.,  35. 

Management  and  Miscellaneous 
costs,  191-193. 

Managers  of  municipal  electric 
lighting,  provided  for  by  law,  42 ; 
duties,  42;  bonds  required  from, 
321-322;  authority  of,  325,  329; 
length  of  service,  325-326;  quali- 
fications of,   326-327;  member- 

,    ship  in  technical  societies,  327- 

.  328;  State  Association  of,  328; 
political  activities  of,  328;  sala- 

.  ries,  329;  integrity  of,  discussed, 
330-331;  quality  of  service  ren- 

,  dered  by,  332-334;  attitude  of 
companies  toward,  334;  in  pur- 
chasing plants,  352-353. 

Manchester,  244. 

Mansfield,  71  (footnote),  74  (foot- 
note), 100;  sells  current  for  street 
lighting,  207  (footnote). 

"Manufacturing  cost,"  184,  188. 

Marblehead,  71  (footnote). 


Martin,  T.  C,  14.  31  (footnote). 
Massachusetts,  Bureau  of  Statis- 
tics, 5;  Waterways  and  Public 
Lands  Commission,  5, 141 ;  High- 
way Commission,  5,  142;  Secre- 
tary of  the  Commonwealth,  5, 
266;  Tax  Commissioner,  5,  268, 
passim;  State  Forester,  6,  142; 
Industrial  Accident  Board,  5. 

Massachusetts  Board  of  Gas  and 
Electric  Light  Commissioners, 
referred  to,  2,  4,  5,  passim;  law 
creating,  36-37;  policv  of,  49-^54; 
active  supervision  of  municipal 
plants,  282-284;  suggestions  re- 
garding policy  to  be  followed, 
365-367. 

Annual  reports  of,  3, 19, 33, 365. 
passim;  annual  returns  required 
by,  criticized,  364-365. 

Matthews,  Nathan,  studies  in  mu- 
nicipal street  lighting,  19;  on 
Holyoke  Case,  71  (footnote). 

Maximum  demand  faator,  98. 

Maximum  net  rate,  202-205;  in 
purchasing  plants,  249. 

Merriraac,  71  (footnote),  74,  146. 

Meters,  rental  of,  45  (footnote) ^ 
202;  at  station,  testing  of,  301- 
302;  308-309;  customers',  inac- 
curacy of,  310-311. 

Michigan,  municipal  plants  in,  56 
(footnote). 

Middleborough,  69  (footnote),  74. 

Middleton,   70   (footnote).  . 

Miller's  Falls,  72.  74. 

Minimum  monthly  charges,  ap- 
proved by  Commission  in  Massa- 
chusetts, 45;  for  light,  202;  for 
power,  205. 

Motors.  115-116. 

Municipal  Journal,  favors  public 
ownership,  32. 

Municipal  light  boards,  legal  pro- 
vision for,  42,  325;  character  of, 
331-332. 

Municipal  lighting  plants,  method 
of,  acquiring  in  Massachusetts, 
38-41. 

Municipal  ownership,  law  provid- 
ing for,  in  Massachusetts,  out- 
lined, 38-49;  action  taken  by 
municipalities  regarding,  72-73, 
344;  reasons  for  adoption  of,  339, 
354. 

National  Civic  Federation,  Report 
on  Municipal  and  Private  Operar 
tion  of  Public  Utilities,  men- 
tioned, 19;  reviewed,  29-31;  Re- 
port on  Commission  Regulation 
of  Public  Utilities,  34. 

National   Electric   Light   Associa- 


•  tion,  theory  regarding  deprecia- 
tion, 218;  does  not  admit  mana- 
gers of  municipal  lighting,  327. 

National  Municipal  League,  pub- 
lications referred  to,  31. 

Needham,  59,  74. 

New  business,  little  effort  to  secure, 
on  part  of  municipal  plants,  340. 

Newburyport,  215. 

New  York  (State),  1890  census  of 
electric  plants  in,  13. 

New  York  Public  Service  Commis- 
sion, 34,  237  (footnote). 

North  Adams,  146. 

North  Attleborough,  70,  71  (foot- 
note), 74,  146. 

North  Brookfield,  242  (/oofnofc), 244. 

Norwood,  85,  136.  140,  151,  266. 

Note  issues,  of  municipalities  to  be 
certified  by  the  Director  of  the 
Bureau  of  Statistics,  41  (foot- 
note);   of   companies   not    regu- 

.  lated,  52;  to  cover  losses,  155, 
224;  interest  on,  212-213. 

Office  room,  frequently  inadequate 
in  public  plants,  302. 

Ohio,  reports  on  78  public  plants 
in,  32;  rank  in  the  electrical  in- 
dustry, 56. 

Oklahoma.  municipEil  plant  opera- 
tion in,  33. 

Operating  ratios  compared,  207. 

Output  of  current,  various  analy- 
ses, 97-107;  station  use,  100;  un- 
accounted for,  100-104;  develop- 
ment of  different  classes  of  busi- 
ness,   105;   per  oapita  analyses, 

■  106-107 ;  sales  per  customer,  111- 
112;  in  purchasing  plants,  134- 
136;  reasons  for  purchasing,  303- 
304.  See  also  "Purchase  of  cur- 
rent." 

Parsons,  Frank,  articles  favoring 
municipal  ownership  criticized, 
17-19;  referred  to,  20, 29;  quoted, 
30. 

Pasadena,  municipal  plant,  31* 

Paxton,  245  (footnote). 

Peabody,  59,  passim. 

Pensions  for  municipal  employees, 
265. 

Perrine.  F.  A.  C,  20;  quoted.  23-24. 

Pittsburgh,  private  plant,  29. 

Plant  accounts,   154. 

Plant  cost,  depreciated,  166;  gross, 
156-158. 

Plymouth,  116,  164,  215. 

Plymouth  County,   142. 

Poles,  relative  number  of,,  133-134;" 
in  purchasing  plants,  %Z^;  cost  of,; 

,162.  J 


t        '-       • 


Politics  under  public  ownership,  17- 
18.  21 ;  in  connection  with  Mas- 
sachusetts plants,  281,  328,  331- 
332,  360-361. 

Population,  grouping  of  plants  ac- 
cording to  inhabitants  of  dis- 
tricts served.  64-GG;  growth  of, 
145-147;  density  of.  147. 

Porter,  Robert  P.,  opposes  public 
ownership  in  England.  35. 

Power  factor,  91  (footnote). 

Premium,  stock,  68,  214. 

Price,  regulations  affecting  changes 
of,  by  municipal  plants,  44;  by 
companies,  45. 

Prichard,  Charies  E.,  30. 

Prime  movers,  90-91,  93. 

Profit  and  loss,  surplus,  58,  176- 
177;  income,  212. 

Provincetown.  242   (footnote). 

Public  ownership,  probable  future 
of,  367-369. 

Public  Service,  opposes  municipal 
ownership. 

Purchase  of  current,  increasing.  62- 
64;  comparative  data,  97. 

Purchase  of  materials,  methods  of* 
329-330. 

Quincy,  116,  146,  191,  193,  204. 

Randolph,  242  (footnote). 

Rates,  comparative,  15,  17,  22,  25; 
differential  upheld,  63-54;  in 
Massachusetts,  60-61;  average, 
197-200,  202-205;  commercial 
lighting,  201;  power,  201-202; 
street  lighting,  205;  maximum 
net,  202-205;  in  purchasing 
plants,  249-250;  voluntary  re- 
ductions in,  313-314,  350. 

Reading,  71  (footnote). 

Real  estate,  comparative  value  of, 
167;  in  purchasing  plants,  243- 
244.  See  also  "Valuation  of  es- 
tates." 

Renewals,  depreciation  allowance 
expended  for,  44,  217. 

Rent  of  offices,  rarely  paid  by 
municipal  plants,  192,  246. 

Repairs  and  renewals,  comparative 
cost  of,  190,  218-221. 

Roads,  length  of,  in  districts  served, 
143. 

Rosewater,  Victor,  on  comparisons 
of  public  and  private  ownership, 
26. 

Salaries,    unit    cost    of,    191-192; 

average,  262. 
^ak^  'cf*  current.    See    "Output," 
•  amdi  "•^ate»!|» 
Schiff^  Moiris,'  quoted,  64. 


I 


I 


• 


484 


INDEX 


Schedule  for  local  survey,  outliaied, 

287-293. 
Seekonk,  146. 

Serial  bonds  only  to  be  issued  by 

municipal  plants  after  1913,  41. 

Shaw,    Bernard,   favors  municipal 

ownership,  35. 
Show-rooms,      few    in     municipal 

plants,  340,  350. 
Shrewsbury,  136. 
Sick  leave,  when  granted,  337. 
Single-phase  system,  301. 
Sinking  funds,  discussed  for  public 
plants,  22;  none  to  be  created  by 
municipalities  in  Massachusetts 
after  1913;  pa5niient8  to,  included 
in  cost  of  service,  45;  amount 
paid  (1914-1915),  214;   part  of 
the  cost  of  street  lighting,  238. 
South  Hadley,  70  (footnote),  280- 

281. 
South  Norwalk,  municipal  plant, 
29,  31;  financial  policy  of,  238 
(footnote). 
Spencer,  84. 

Springfield  (Mass.),  report  of  spe- 
cial  committee   referred   to,    19 
(footnote),  rate  case  (1893),  53. 
Stock,  dividends  of,  not  allowed  in 
Massachusetts,  49;  issues  regu- 
lated by  Commission,  49,  52-54; 
amount    outstanding,    177;    in- 
crease of,  in  1914-1915,  224. 
Street  lamps,   arcs  and   incandes- 
cents,  125;  per  oapita,  125;  candle 
power  of,  126;  wattage  of,  126; 
number  of  hours'  use  per  night 
and  night?,  use  per  month,  127. 
Street  lighting,  cost  of,  to  munici- 
palities owning  their  generating 
plants,  various  analyses,  230-239 ; 
in    purchasing   plants,    251-253; 
quality  of  service,  312,  314-315. 
Streets  with  overhead  lines,  130. 
Sunderland,  251   (footnote). 
Syracuse,  32. 


Taunton,  69  (footnote). 

Taxes,  not  paid  by  municipal 
plants,  15;  Commons'  views  on 
loss  of,  by  municipalities,  21; 
taxes  lost  are  really  a  part  of  the 
expense,  24;  increase  in  unit  cost 
of.  for  companies,  182  (footnote), 
193;  amount  lost  vmder  public 
ownership  computed,  234-245. 

Tax  rates,  comparative  (1910-1915), 
267-268,  274-275,  278-279. 

Thompson,  Carl  D.,  bulletin  on 
municipal  electric  lighting  criti- 
cized, 33  (/oof  noie). 

Toledo,  private  plaat,  2Vi. 


• .  , 


Transformers,  line,  relative  sizes 
of,  103;  cost  of,  103;  other  data, 
134;  in  purchasing  plants,  135.  ^ 

Two-phase  system,  in  some  muni- 
cipal plants,  301. 

Underground  construction,  devel- 
opment of,  67-68;  extent  of,  in 
companies,  133;  cost  of,  161. 

Unionization  of  labor  in  Massachu- 
setts plants,  338. 

"Unit  costs,"  total,  181-183,  193- 
194;  manufacturing,  184;  fuel, 
184-185;  wages  at  station,  186- 
187;  distribution,  188-191;  man- 
agement and  miscellaneous,  191- 
193;  in  purchasing  plants,  246- 
247. 

United  Electric  Ck>mpany  (Spring- 
field), 74. 

Urban  population,  143-145. 

Use  factor,  124. 

Utilities  -Magazine,  favors  public 
ownership,  32. 

Utilization  of  maximum  demand, 
124. 

Valuation,  theory  held  by  Massa- 
chusetts Commission,  52. 

Valuation  of  estates,  comparative 
increase  in,  267,  270-274,  276- 
278;  per  oapita,  267. 

Ventilation  of  stations,  302. 

Vineyard  Lighting  Company,  97 
(footnote),  204,  215. 

Voluntary  associations,  required 
to  make  annual  returns  to  the 
Commission.  47;  attitude  toward, 
63;  extent  of,  in  the  lighting  busi- 
ness, 62,  83,  84;  other  considera- 
tions, 223-224. 


Wages,     relative,     262-264.      See 

"Labor,"  and  "Employees." 
Wakefield,    63    (footnote),    69,  74, 

158.  206. 
Wellesley.  report,  32,  69,  70,  136, 

146. 
Westfield,  69  (footnote),  101. 
West  Springfield,  74  (footnote), 
Weymouth,  164,  215. 
WiUiamstown,  84. 
Winchendon,   165    (footnote),   166, 

193,  215. 
Wisconsin,    public    plants    in,    66 

(footnote). 
Wisconsin    Railroad    Commission, 

34,  237,  284. 
Worcester  County,  84,  142. 
Working  capital,  154  (footnote). 
Workmen's     Compensation     Act, 
.    265-SG6.  •   *     • 


CAMBRIDGE  .  MASSACHUSETTS 
U   .   S   .  A 


Prt|e  Economic  Ceciapct 


THE   CAUSE   AND    EXTENT   OF   THE    RECENT  INDUS- 
TRIAL PROGRESS  OF  GERMANY.    By  Earl  D.  Howard. 

THE  CAUSES  OF  THE  PANIC  OF  1893.     By  William  J. 
Lauck. 


INDUSTRIAL    EDUCATION. 
Ph.D. 


By  Harlow  Stafford  Penon, 

By  Al. 


FEDERAL  REGULATION   OF   RAILWAY  RATES 
bert  N.  Merritt,  Ph.D. 

SHIP  SUBSIDIES.  An  Economic  Study  of  the  Policy  of  Sub- 
sidizing Merchant  Marines.    By  Walter  T.  Dunmore. 

SOCIALISM:  A  CRITICAL  ANALYSIS.    ByO.  D.  Skelton. 

INDUSTRIAL  ACCIDENTS  AND  THEIR  COMPENSATION. 
By  Gilbert  L.  Campbell,  B.  S. 

THE  STANDARD  OF  LIVING  AMONG  THE  INDUSTRIAL 
PEOPLE  OF   AMERICA.     By  Frank  H.  Streightoff. 

THE    NAVIGABLE   RHINE.    By  Edwin  J.  Clapp. 

HISTORY  AND  ORGANIZATION  OF  CRIMINAL  STATIS- 
TICS IN  THE  UNITED  STATES.  By  Louis  Newton 
Robinson. 

SOCIAL  VALUE.    By  B.  M.  Anderson,  Jr. 

FREIGHT  CLASSIFICATION.    By  J.  F.  Strombeck. 

WATERWAYS  VERSUS  RAILWAYS.  By  Harold  Glenn 
Moulton. 

THE  VALUE  OF  ORGANIZED  SPECUUTION.  ByHatri- 
lon  H.  Brace. 

INDUSTRIAL  EDUCATION:  ITS  PROBLEMS,  METHODS 
AND  DANGERS.    By  Albert  H.  Leake. 

THE  UNITED  STATES  INTERNAL  TAX  HISTORY  FROM 
1 86 1  TO  I  87 1 .     By  Harry  Edwin  Smith. 

WELFARE  AS  AN  ECONOMIC  QUANTITY.  By  G.  P.  Wat- 
kins. 

CONCILIATION  AND  ARBITRATION  IN  THE  COAL  IN- 
DUSTRY  IN  THE  UNITED  STATES.  By  Arthur  E.  Suf- 
fern. 

THE  CANADIAN  IRON  AND  STEEL  INDUSTRY.  By  W.  J. 
A.  Donald. 

THE  TIN  PLATE  INDUSTRY.    By  D.  E.  Dunbar. 

THE  MEANS  AND  METHODS  OF  AGRICULTURAL  EDU- 
CATION.     By  Albert  H.  Leake. 

THE  TAXATION  OF  LAND  VALUE.    By  Yetta  Scheftel. 

RAILROAD  VALUATION.     By  Homer  Bews  Vanderbloe. 

RAILWAY  RATES  AND  THE  CANADIAN  RAILWAY  COM- 
MISSION.   By  D.  A.  MacGibbon. 

THE  CHICAGO  PRODUCE  MARKET.    By  Edwin  Griswold 

Nourse. 

THE  ARBITRAL  DETERMINATION  OF  RAILWAY  WAGES. 
By  J.  Noble  Stockett. 

THE  RESULTS  OF  MUNICIPAL  ELECTRIC  LIGHTING 
IN    MASSACHUSETTS.     By  Edmond  Earle  Lincoln. 


D550 


L65 


COLUMBIA  UNIVERSrr  ^i^coln,  Edmond  Earle,  M.A,,  Ph.D. 

TOs  book  is  due  on  the  date  ^^^^^  The  Results  of  Municipal  Electric 
expiration  of  a  definite  period  after  th  ▼•!_..         i».  L        xx 

as  provided  by  the  rules  of  the  Libra  Lighting  in  Massachusetts. 

rangement  with  the  Librarian  in  chax 


DATE  BORROWED 


MAY  111360 


DATE  DUE 


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DATE  BOn 


1 


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'jOnii  1960 


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COLUMBIA  UNrVERS 


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JUL  1 1 1994 


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JUL  22  KHl 


END  OF 
TITLE 


